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UK MTD 2020 digital links extension from HMRC

  • Feb 29, 2020 | Richard Asquith

On 1 April 2020, the second phase of UK Making Tax Digital (‘MTD’) for VAT programme will be implemented. HMRC has offered an option to apply for a further extension to this deadline if it can be shown there is no reasonable fix to legacy IT issues and the operation of an uninterrupted ‘digital journey’. Businesses applying for the extension must include a comprehensive plan to resolve any break in the digital journey. Avalara can help you understand if you are eligible, and how to apply to HMRC.

The extension would only be available for businesses that can demonstrate legacy systems issues or other significant blockers to implementing a complete digital journey.

The process to secure an application is as follows:

  • Apply to HMRC as soon as possible.
  • Present an IT map of the business’ current accounting system, clearly identifying and highlighting where the journey fails and why it’s ‘unachievable and not reasonable’ today to export data from one stage to another via digital means.
  • Explain why the business cannot meet the April 2020 deadline. Examples could include:
    • In the middle of a system upgrade or replacement, and the launch date is after April 2020; or
    • A component of the system, requiring manual intervention, cannot be fixed or replaced before April 2020.
    • A recent business acquisitions or reorganisation means accounting systems cannot be integrated into VAT reporting groups or combinations in time.
  • Present a plan of action, with IT configuration and timetable, to resolve the problem. This should not take more than one year after April 2020.
  • And lastly detail the controls the business will put in place to guarantee that any temporary manual manipulation or data transfer is done without any errors.

When an MTD extension will be refused

However, HMRC are clear on a few points in the application criteria, including:

  • Cost alone cannot be a justification for failing to complete the digital journey; and
  • And if commercially available software, such as we at Avalara provide, solves the blocker, then the application will likely be rejected.

Avalara can help with your extension

Our VAT team can talk through the requirements for an extension, and how HMRC may view your IT configuration in terms of the 2020 MTD requirements. Contact us for a free conversation about the extension process. Contact us today.

Need help with your UK VAT compliance?

Researching UK VAT legislation is the first step to understanding your VAT compliance needs. Avalara has a range of solutions that can help your business depending on where and how you trade. 

VP Global Indirect Tax
Richard Asquith
VP Global Indirect Tax Richard Asquith
Richard Asquith is the former VP Global Indirect Tax at Avalara
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