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Tax & Accounting13 February, 2020

What you need to know about the delay to the end of the soft-landing period for MTD for VAT

The introduction of Making Tax Digital (MTD) for VAT in April 2019 seems like a distant memory now that you have undoubtedly filed your first monthly and quarterly VAT submission. While there were many changes needed for the implementation for the government initiative, the 12 month “soft landing period” gave advisors and businesses one year to get their systems 100% digitally linked.

HMRC has delayed the end of the soft-landing period that was due to come to an end on the 1st of April 2020.

“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 more time 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.”

Despite the 12 month extension, most advisors will want to enjoy the advantages of digital linking as soon as possible and this announcement, made so close to the original deadline, is unlikely to change their plans.

The end of the soft-landing means ‘copy and paste’ does not constitute a digital link. As we approach the first anniversary of MTD for VAT you’ll see a lot of coverage on this topic in the accountancy press, with discussions around just what constitutes a digital link and whether copy and paste will be allowed.

Here is a guide drawing on HMRC’s published guidance VAT Notice 700/22: Making Tax Digital for VAT

What are accepted as digital link?

HMRC says it will accept the following digital links:

  • emailing a spreadsheet containing digital records so the information can be imported into another software product
  • transferring a set of digital records onto a portable device (for example, a pen drive, memory stick, flash drive) and physically giving this to someone else who then imports that data into their software
  • XML, CSV import and export, and download and upload of files
  • automated data transfer
  • an API transfer

A digital link also includes linked cells in spreadsheets, for example, if you have a formula in one sheet that mirrors the source’s value in another cell, then the cells are linked.

HMRC does not consider the use of ‘cut and paste’ or ‘copy and paste’ to select and move information, either within a software program or between software programs, to be a digital link.

What does that mean for CCH OneClick customers?

In other words, if you follow the correct procedures for linking and labelling cells in your VAT spreadsheets, the MTD for VAT function in CCH OneClick will be fully compliant with the HMRC requirements. This is great news for advisors and their clients who want to keep using current processes, for example making complex adjustments in spreadsheets.

Are you maintaining digital records today?

The end of the soft-landing period means it is more important than ever to maintain digital records to ensure you VAT submission is compliant. The good news is that spreadsheets remain acceptable for digitally capturing data. For some, this might be the logical first step to digitalisation. Providing you use API-enabled or bridging software like CCH OneClick to make the final submission, you have the freedom to keep spreadsheets with valuable historic data and calculations in the process.

Find out more about CCH OneClick

Since the introduction of MTD we’ve been engaging with many our customers to better understand the issues surrounding this change and how CCH OneClick can make the transition simple.

This is what two of our early adopters have to say about CCH OneClick and their first submissions.

DSA Prospect have taken MTD in their stride, thanks to CCHOneClick. Find out how the consistent view of the data and software has upped their efficiency no end.

“Wolters Kluwer helped us to get to grips with what’s required on MTDfVAT and how we can use the software effectively to comply.” – Director and partner Alec Pridsam

Haigh & Co were early adopters of CCHOneClick, submitting their first VAT returns for #MTD in the pilot. Find out how they have made the most of MTD with the help and support of Wolters Kluwer.

“From online help and tutorials to roadshows, the support has been there to guide us in making the most of this change as an opportunity for the business. As a result, we’re happy with the way it’s all going.” – Partner Mark Fox.

If you would like to find out more about CCH OneClick, click here or email [email protected] You can also download our latest Making Tax Digital guide {link} here for more information about how to prepare for your first submission. Note: this article was first published in February 2020 but was updated following HMRC’s statement on the extension.

We’re experts in providing information, software and services to tax executives who work in complex, compliance-driven environments.  Our innovative and mobile technology provides the information that tax, accounting and audit professionals need to make accurate decisions, comply with legislation and to increase the efficiency of their operations. We support our customers by offering expertise from our in-house team of finance professionals, ex-accountants and developers.
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