When MTD was introduced, HMRC advised that there would be a ‘soft landing’ period for MTD VAT returns.
On 1 April 2020 the ‘soft landing’ period ends and HMRC will be able to apply penalties to any businesses who are not preparing and filing their VAT returns with digital links in place – unless they are one of the businesses postponed until October.
The “soft landing period” refers to links between data sources. Since starting MTD, businesses were given a year where they did not have to have digital links between systems. For example, a client using both Sage and Xero to compile VAT return data, could choose to write down the data from Sage and manually insert it into Xero and then run a VAT return. When their “soft landing” period ends, they must have a digital link that picks up the data in Sage electronically and puts it into Xero.
If you have taxable turnover in excess of £85,000 and are still filing your VAT returns under the ‘old’ HMRC portal you must take urgent steps to sign up to MTD and find appropriate software such as Xero.