HMRC has announced that some UK businesses can apply for an extension to comply with MTD. These are those with complex or legacy IT systems; they can apply for an extension to comply with the MTD requirements for digital links. However, it is important to note that any extension does not apply to digital submission or digital record keeping.
The criteria for the applying for the extension is set out in HMRC’s VAT Notice 700/22 Making Tax Digital which you can find here. This states that in order to be considered for a specific direction, a business will need to:
- Make a formal application to HMRC as soon as possible for an extension. This must be no later than the end of your soft landing period;
- Explain why it is not achievable or reasonable to have digital links in place by the deadline. (either April 2020 or October 2020, for businesses mandated to join MTD in 2019). For example, why does commercially available software not meet the digital link requirement for your business;
- Submit details of the systems unable to link digitally (provide a current map of your existing VAT systems, highlighting the exact areas that cannot link digitally);
- Provide a clear explanation and timetable for when and how you will become fully MTD compliant (ordinarily no later than one year from the end of the soft landing period); and
- State the controls you will put in place to ensure any manually transferred data moves accurately and without error.
For assistance with the above or MTD requirements in general, please contact one of our VAT experts.