VAT Notice 700/22 Making Tax Digital

HMRC have updated VAT Notice 700/22 MTD for VAT.  This sets out examples of how digital links can be used and where they are required.

VAT registered businesses should take the time now to look at this notice, as MTD for VAT came in to effect April 2019, and if a change in accounting software is required, or the setup of digital links, then this could take time to implement.  Many businesses are assuming their current software is MTD compliant, but there are some that are probably not even aware MTD exists. The notice is quite clear that it is happening, and there will be no further delay.

What is a “digital link”?

A digital link includes linked cells in spreadsheets, for example, if you have a formula in one sheet that mirrors the source’s value in another cell, then the cells are linked.

HMRC will also accept digital links as:

  • emailing a spreadsheet containing digital records to a tax agent so that the agent can import the data into their software to carry out a calculation (for instance, a Partial Exemption calculation)
  • transferring a set of digital records onto a portable device (for example, a pen drive, memory stick, flash drive) and physically giving this to an agent to import that data into their software
  • XML, CSV import and export and download and upload of files
  • automated data transfer
  • API transfer

However the good news is for the first year of mandation (VAT periods commencing between 1 April 2019 and 31 March 2020) businesses will not be required to have digital links between software programs. The one exception to this is where data is transferred, following preparation of the information required for the VAT Return, to another product (for example, a bridging product) that is API-enabled solely for the purpose of submitting the 9 Box VAT Return data to HMRC. The transfer of data to this product must be digital.’

If you need help with MTD for VAT please give us a call on 01908 227055.

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