Phase 2 of the UK’s Making Tax Digital regulations take effect from 1 April 2021. MTD Phase 1 instituted a requirement for UK VAT-registered companies to submit their VAT returns digitally, via the HMRC API. MTD Phase 2 has much stricter requirements for how transactions must be recorded and submitted.
Specifically, MTD Phase 2 sees the introduction of ‘digital links’. That is, there can be no manual intervention in the VAT compliance process, such as a copy-pasting data.
Now, an unbroken digital link needs to hold from the time of a transaction to the time it is included in a VAT return calculation.
A deep dive into MTD2 digital links
That may sounds impossibly complex, but it really just means that companies require an effective automated process. The important thing is to fully understand HMRC’s specifications and to ensure information is created and submitted accordingly.
We explain what digital links are in detail, and how you can ensure you comply with the requirements of MTD Phase 2, in Vatglobal’s Making Tax Digital Phase 2 whitepaper. You can get complimentary access to the paper here.
Digital links need digital tools
The MTD process is automated. Businesses must therefore ensure they have the appropriate digital tools. Companies that rely on processing data manually via spreadsheets will need to update their technology.
Flexible VAT compliance technology
Vatglobal’s cloud-based VAT compliance technology automates manual VAT compliance processes and ensures you are always fully VAT compliant.
Vatglobal will ensure you have the tools to meet your MTD compliance obligations. With Vatglobal’s proprietary VAT compliance technology, your businesses can easily adapt as VAT regulations change.