Delay of VAT Making Tax Digital ‘phase two’

The government has announced that, in light of the impact of Covid-19, the digital links requirement of Making Tax Digital for VAT will be deferred by 12 months to 1 April 2021.

What is being delayed?

The first phase of MTD for VAT required businesses to sign up to MTD and submit their VAT returns directly from their software.  ‘Phase two’ requires businesses to digitally link their software all the way from the initial entry of the transactions through to the submission of the VAT return, irrespective of how many pieces of software were used.

It is this second phase of MTD that has been put on ice while businesses respond to the Covid-19 challenges.

When will it now commence?

The requirement to digitally link separate software programmes in the VAT return journey will now only commence from the first VAT return starting on or after 1 April 2021.

Why the delay?

This announcement is expected to be well received by businesses.  Many businesses with legacy or complex systems were struggling to meet the original deadline of April 2020 and this deferral helps businesses to focus on managing the Covid-19 challenges.

How can we help

If you have any VAT queries, please get in touch with your usual Hawsons contact.

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