UK: Further developments around Making Tax Digital and Brexit

Making Tax Digital

The deadline for Making Tax Digital ‘digital links’ in the UK has been extended to the first VAT Return period starting on or after 1 April 2021.

During the soft landing period, HMRC will continue to accept the use of “cut and paste” or “copy and paste” as being a valid digital link. The “soft landing period” was due to end on 31 March 2020, but has been extended due to the significant impact of COVID-19 on UK businesses.

Making Tax Digital requires VAT registered businesses with taxable turnover above the VAT registration threshold to keep records in digital form and file their VAT returns using HRMC approved software. Taxback International has been approved as an HRMC vendor that can communicate directly with the HMRC through an Application Programming Interface (API). Learn more about how we can support you with Making Tax Digital for the UK.

Brexit

The EU and UK resumed post-Brexit talks in April 2020. They are getting negotiations back on track and trying to strike a free trade deal by the end of 2020 to prevent the UK crashing out of the single market. After 31 January 2020, the EU and UK had only managed one round of talks before a number of people involved in these talks were personally dealing with COVID-19.

The UK had previously mentioned they have no intentions of seeking an extension of the transitional period (ending on 31 December 2020).

The EU and the UK have not yet narrowed their differences on the major sticking points. Some of these include whether the UK would formally stay in the European Convention on Human Rights, the extent to which the UK would respect EU regulations, and standards and the question of fisheries.

Michel Barnier, head of EU relations for the UK, has commented that “the UK has failed to engage substantially on these topics.”

A chief negotiator has highlighted a series of deadlines that are hanging over Brexit talks:

• June – decide whether to extend the transition period
• July – come to an agreement on fisheries
• December – negotiate a trade agreement

The next round of talks is scheduled to begin on 11 May and then on 1 June. It is expected they will cover the 11 key topics, including security policy, trade and fisheries.