Timeline of Making Tax Digital

April 2019 signalled the beginning of the soft landing period for MTD. At this time, the United Kingdom began implementing Phase I of Making Tax Digital (MTD) for VAT requiring making digital filings of the nine boxes of the VAT return through HMRC’s API-portal.

The first monthly return was through MTD was on 30th April and by June 30th the first quarterly return was filed.

Who does MTD affect?

The implementation affected all VAT registered businesses with a taxable turnover above the UK VAT threshold of £85,000. This was then deferred to October 2019 for some types of businesses.

Adaption to this new system was not entirely straightforward with many businesses struggling to successfully implementing digital programs. Similarly, the HMRC encountered problems on their side.

A one year soft-landing period allowed businesses more time to implement permanent links whilst using bridging software to transmit their VAT returns digitally. During this grace period the HMRC did not issue penalties for not keeping incomplete digital records.

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Making Tax Digital – Phase II

Phase 2 of MTD was originally scheduled for April 1st 2020 but was postponed for a year due to COVID-19 lockdowns. This signals the beginning of the major changes including an obligation to maintain digital records for submission to the HMRC or risk penalties.

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