If you’re a VAT registered business with a taxable turnover above £85,000, you must follow the rules for Making Tax Digital for VAT.
This also means however, if you use more than one software package to keep records and submit returns, you will need to link them, digitally, by 31 March 2020 unless HMRC sent you a letter to tell you that you’re in the deferral group.
If you’re in the deferral group, you must have links in place between your software by 30 September 2020.
Some ways you can link your software include:
- Using formulas to link cells in spreadsheets
- Emailing records
- Putting records on a portable device to give to your agent
- Importing and exporting XML and CSV files
- Downloading and uploading files
Compatible software is a software product or set of software products that, between them, support the MTD obligations of keeping digital records and exchanging data digitally with HMRC through the MTD service.
If more than one application is being used, data that flows between those applications must also be exchanged digitally.
Digital records can be kept in a range of compatible digital formats. They do not all have to be held in the same place or on one piece of software.
For example, a spreadsheet can be a component of digital record keeping provided the product that consolidates records, or summary records from the spreadsheet, can exchange data digitally with HMRC.
HMRC will give businesses until 31 March 2020 to make sure there are digital links between software products. Before that date, cut and paste will be an acceptable way to transfer information.
The exception to this is where return information is to be transferred to a software product enabled for an Application Programming Interface (an API provides a secure link between software and HMRC) and designed to submit the 9-box VAT return (such as bridging software).
In those circumstances the transfer of information must only be digital.
If you have any questions about Making Tax Digital Software or MTD compliance using Microsoft Dynamics, please get in touch with one of our experience team.