Home » “Soft landing” period for MTD digital links requirement extended for organisations with a later start date

“Soft landing” period for MTD digital links requirement extended for organisations with a later start date

HMRC has published an updated version of VAT Notice 700/22: Making Tax Digital for VAT. The Charity Tax Group (CTG) was among a small number of expert stakeholders consulted on the latest changes to the guidance.

Importantly HMRC has accepted calls from CTG and others (you can read comments from our chairman John Hemming, calling for an extension here) for the soft landing period to be extended to 12 months after the mandated start date – meaning that charities do not have to have full digital links in place until then. In practice this means that charities that have a deferred start date of October 2019 (which will include trusts, unincorporated charities and those in a VAT group – read more about the deferred mandation date here) will not have to implement full digital links at the back-end of their VAT processes until October 2020, six months later than the original April 2020 implementation date. This means that they will have more time to test processes and review the software available from third party providers.

Charities with a mandated start of April 2019 will still need to have digital links implemented by April 2020.

HMRC will allow a period of time (‘the soft landing period’) for businesses to have in place digital links between all parts of their functional compatible software.

For the first year of mandation businesses will not be required to have digital links between software programs.

This means that if Making Tax Digital rules first apply to you from either a:

  • VAT period starting on or after 1 April 2019, you will have until your first VAT return period starting on or after 1 April 2020 to put digital links in place
  • VAT period starting on or after 1 October 2019, you will have until your first VAT return period starting on or after 1 October 2020 to put digital links in place

During the soft landing period only, where a digital link has not been established between software programs, HMRC will accept the use of cut and paste as being a digital link for these VAT periods.

Hyperlinks to the various sections of the guidance can be found below: