Making Tax Digital for VAT: the end of the “soft landing period”
Are you ready for the end of the Making Tax Digital (MTD) for VAT soft landing period?
Most UK VAT-registered organisations with a taxable turnover above the VAT threshold (currently £85,000) will see the end of the soft landing period for Making Tax Digital (MTD) on 31 March 2021. The soft landing period was put in place to help organisations ease into MTD meaning data could be copy-pasted into a VAT return using MTD-compliant software.
For VAT periods beginning on or after 1 April 2021, organisations will need to maintain all accounting records digitally within “functional compatible software”. This is a software program, or set of software programs, that can not only maintain digital accounting records but also generate the VAT returns and submit them to HMRC.
In many cases, an organisation’s functional compatible software will comprise a single program which maintains the accounting records. In the instance of needing to use more than one software program, digital links must be used to transfer the data from one program to the other. Copy-pasting will no longer count as a digital link.
Organisations should ensure that they are maintaining digital links in their transactions through to their VAT submission. Here are some example situations and FAQs to help you consider your position and potential actions.
If you have any queries about your organisation’s current process, please do get in touch.