Making Tax Digital for VAT – Soft landing extended

Some good news! HM Revenue & Customs have announced a one-year extension of the soft landing period for Making Tax Digital for VAT.

A letter has been sent to software houses from HMRC stating that due to the impact of Covid-19 they are allowing businesses more time to put the full digital links in place.

What does this mean?

If you have two or more software products that help calculate your VAT they should be digitally linked. The soft landing period where the data may be manually transferred has been extended to 1 April 2021 so data can just have a manual transfer into a spreadsheet or be manually copied from both sets of software into a spreadsheet to send digitally to HMRC.

Details can be found on the government website. 

A spokesman from HMRC confirmed this extension for twelve months is correct and read out the HMRC notice which states:-

“We understand that the impact of Covid-19 is creating extremely difficult times for all, and we are committed to helping in every way possible all those businesses facing unprecedented challenges.

Therefore, we are providing all MTD businesses with longer to put in place digital links between all parts of their functional compatible software.

This means that all businesses now have until their first VAT return period starting on or after 1 April 2021 to put digital links in place.”

VAT returns must continue to be sent in digitally, including this quarter even if you are deferring payment for VAT, and you must still be keeping records digitally. It is the digital links between software that has been delayed for twelve months, however, we would encourage businesses not to be complacent and to continue with the task of getting the digital links in place before the 1 April 2021.

Please do not hesitate to contact Margaret Scott in our Online Services department on 01254 688130.