HMRC are extending the soft-landing period for businesses that can evidence that it is not practical for them to implement digital links across their accounting systems prior to the relevant deadline.
The previous position was that businesses must have digital links in place to transfer data via different elements of their accounting systems by the end of their soft-landing period of April 2020 (or October 2020 for businesses where the entry date for use of MTD was deferred in order to be MTD compliant). The return is then submitted by a link to HMRC’s system.
This has created real issues for businesses such as those that have different and often incompatible accounting software packages generating sales, purchases and expense information or are non-UK owned businesses with software that is not geared up for UK VAT accounting, let alone MTD.
Where the business can present a case in writing to HMRC that it is not achievable or reasonable for them to have digital links in place across their software they can now apply for additional time to implement MTD. This will also apply where a business purchases another company that it includes in a VAT group and the other company has different accounting software to the existing group members.
Businesses cannot just assume that HMRC will allow extra time; the business must write for a direction from HMRC before the end of the soft-landing period and present a case for why it is not achievable and reasonable to have the digital links in place by the end of the soft-landing period. Cost alone will not be accepted by HMRC as a reason for not becoming MTD compliant.
Once the request is submitted to HMRC it will be reviewed, possibly with the involvement of Customer Compliance Managers and further information may then be requested by HMRC who will then either agree or reject the request.
If your business is struggling to meet the requirements for MTD for reasons other than the cost of a software upgrade and you require assistance with presenting a case to HMRC for deferment of the end of the soft-landing period please contact our VAT helpline for assistance.
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