Filing VAT returns

Businesses must file their VAT returns using functional compatible software.  Most businesses are doing this successfully, but those who do not may be charged a £400 penalty for each VAT return filed.

Keeping records digitally

Businesses must also keep some records digitally within their functional compatible software.


Transferring/exchanging data between software programmes

If business transfers or exchanges data between software programmes, this should be done using digital links. Businesses must digitally link each piece of software they use. A digital link is where you transfer or exchange data electronically between software programs, apps or products. You must not transfer or exchange data manually.

Some examples of digital links are:

  • linked cells in spreadsheets, including the use of ‘cell number/return’ functions
  • 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, such as a pen drive or memory stick, and physically giving this to someone else to import that data into their software
  • XML, CSV import and export, and download and upload of files
  • automated data transfer
  • Application Programming Interface (API) transfer


Please see the link below, from HMRC, that expands on these rules.

More from our tax experts

You can find all of our latest tax articles and tax resources here.

If you are looking for advice in a particular area, please get in touch with your usual Hawsons contact.

Alternatively, we offer all new clients a free initial meeting to have a discussion about their own personal circumstances – find out more or book your free initial meeting here. We have offices in Sheffield, Doncaster and Northampton.

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Tony Nickson

VAT Consultant, Sheffield

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