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HMRC steps up MTD guidance

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HMRC has published a further package of information on making tax digital (MTD), to support businesses and agents in the run up to the introduction of mandatory digital record-keeping and reporting for VAT from April 2019.

The package includes:

  • new VAT notice 700/22: Making Tax Digital for VAT;
  • a list of software suppliers; and
  • a communications pack containing a range of background information for promotion of the voluntary MTD for income tax pilot.

VAT notice 700/22 provides guidance on the detailed requirements as set out in the relevant Value Added Tax (Amendment) Regulations, SI 2018/261. Parts of the notice have force of law from April 2019, including the requirement for transfers of data between applications that make up the ‘functional compatible software’ to be made via ‘digital links’, rather than manually, for VAT periods starting on or after 1 April 2020.

The notice states that a digital link is required: ‘where the data to be included in any of the boxes of the VAT Return has been prepared within a software program, product or application, and this data is then transferred to another program, product or application in order to submit the VAT Return data to HMRC via the API platform’.

Between 1 April 2019 and 31 March 2020, HMRC will in most cases accept the use of manual ‘cut and paste’ in place of digital links. On or after 1 April 2020, transfers of data between applications must be effected via a digital link.

The list of software suppliers identifies those who have:

  • tested their products in HMRC’s test environment; and
  • demonstrated a prototype of their software to HMRC.

This list currently contains 18 such suppliers.