HMRC has announced that businesses with complex or legacy IT systems may require a greater amount of time to put digital links in place.
Such businesses can apply for additional time to put the mandatory digital links in place. Specific direction applications outside of the soft landing period, where more time is needed to comply with digital link requirements following the purchase of another business, will also be considered by HMRC.
However, HMRC has stressed that cost alone will not pass as an adequate reason to issue a specific direction. All business are required to make every effort to comply with the digital links requirements by the end of the soft landing period.
To be considered for a specific direction, and granted an extension, businesses must make a formal application to HMRC.
The application should explain why it is unreasonable and not achievable for digital links to be in place by the digital links mandation date. They also need to submit details of the systems that are unable to be digitally linked, for example by providing a map of existing VAT systems, underlining the particular areas that cannot be digitally linked.
Businesses must provide a clear explanation and timetable for when and how they will become fully MTD compliant, which ordinarily will be no later than 12 months from the end of their soft landing period.
What HMRC considers to be ‘unreasonable and not achievable’ will depend on individual circumstances.
Examples given by HMRC include:
- Where a component part of the business’ IT system is not capable of importing and exporting data from another part of the IT system and it is not possible to update or replace that non-compliant component (or supersede that part of the system) by the end of the soft landing period.
- Where a business is in the process of updating or replacing its IT system and the planned implementation date for the new IT system is not before the end of the soft landing period.
You can find more help and support for MTD on GOV.UK, including webinars and a video.