Digital Link compliance by April 2021
You will recall MTD for VAT had three components: Digital Records, Digital Links and Digital Submissions. When the MTD software frenzy hit the market with a vast range of submission software most of these complied with all three components. The key here is MOST, not all. I have encountered some products with Digital Submission functionality but not fully taking into account Digital Links in the whole process. Some of these bridging software products lacked a Digital Links overview. Why? Well, it did not become compulsory until the end of what HMRC called the soft landing period. That period is ending (it was extended from April 2020 to ’April 2021) and if your MTD for VAT process is not fully digitally linked then you need to take action now (warning signs are typing numbers into CSV files, copying and pasting VAT Return figures or cutting and pasting between spreadsheets or CSV files).
What exactly is a Digital Link?
So, what is a Digital Link? An electronic pathway from data to submission. Think of it like calling a friend using your mobile phone. You go to the contact record that houses all your friend’s details (the Digital Record) and push “phone”. The software in your phone captures the phone number contained in the contact record and makes the call automatically. You never type in the phone number. The contact record information is digitally linked to the actual call. That is a Digital Link. HMRC want you do to the same with your VAT Return. You create Digital Records and when you submit to HMRC you need to digitally connect your submission to those original records without manual intervention such as copying and pasting etc.
Check out this short fun video that explains the situation. We encourage you to share this link with any spreadsheet users who are at risk of non-compliance by April or anyone who will have to register for MTD for VAT by April 2022. Digital Links? Are You Ready?
Most of your clients will be fully compliant if they use a cloud-based system but if they are using spreadsheets then there is a risk (ironically, this can affect larger and more complex organisations just as much as smaller ones). So, they need to take action now. If they need more time, there is a process to request an extension but sooner or later they will need to put Digital Links properly in place.
Like Brexit and the virus, MTD is not going away. If X-VAT can help, feel free to get in touch by emailing firstname.lastname@example.org. Or head over to our website at vatman.online where we have fully compliant, easy to use MTD for VAT software (vatman solo and vatman pro). And please do share our short snappy video with your clients who use spreadsheets. It is a fun way to explain the need for Digital Links.