VAT Notice 700/22 Making Tax Digital for VAT was published on 13th July 2018, alongside two other supporting documents dealing with Making Tax Digital for Business and a related Software Suppliers Report.
It is important to be aware that HMRC have the authority to issue Making Tax Digital legislation by way of these notices and this notice follows up from the earlier draft notice published in December 2017.
So What Does The Notice Say?
This notice confirms that every business will be required to set up their own business tax accounts, set up e-mails and action agent authorisation.
As far as those who are “digitally excluded” and are clearly not able to do this are concerned, the categories remain as those falling under insolvency proceedings, religious reasons, disability, age and remoteness of location. It appears from this notice that if you qualify for one of these exclusions under Making Tax Digital, then this will apply even if you are currently not exempt from filing VAT on-line.
If you do wish to apply to be “digitally excluded” then this Notice advises you to contact HMRC via the VAT helpline. In cases where HMRC do not consider that digital exclusion is appropriate then they will point you in the direction of their online support services.
What About Digital Links?
We ae aware that a digital link for HMRC is “an electronic or digital transfer or exchange of data between software programs, products or applications” and is not the use of “the cut and paste option.”
This Notice also confirms that this digital link does not involve manual copying or transposition which means in practice that writing down figures from one software program and then manually inputting them into another software program does not constitute a digital link.
The Notice has given the following examples of digital links:
- Linked cells in a spreadsheet
- Emailing a spreadsheet to an agent
- Saving records onto a USB key and passing it to the new accountant
- XML, CSV import and export files
HMRC also recognise that Making Tax Digital could mean that a business would use more than one software program which is acceptable providing that there are digital links between the two. We are also aware that there will be “a soft landing” in relation to this approach until April 2020 when these links will become mandatory.
So What Is The Start Date?
The start date for Making Tax Digital for VAT remains for VAT return periods commencing on or after 1 April 2019.
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