Farming businesses are being warned of another impending deadline - to have digital links in place by the end of March for Making Tax Digital.
Just days remain for businesses that are operating Making Tax Digital for VAT to have ‘digital links’ up and running across their record keeping systems.
HMRC requires that where a participating business holds financial records on separate systems including spreadsheets, that there should be a digital link between these records.
Previously it would have been possible to transfer data from one set of records to another manually, but from 1 April 2021 this will no longer be allowed.
However, the transfer of information digitally by email for example will be permitted and certain VAT calculations can still take place outside of the ‘digital journey’.
Saffery Champness is advising farming and rural businesses to have their systems up to date in time for their first VAT return period on or after 1 April 2021.
The accountancy firm says an extension can still be requested but this must be submitted to HMRC before the end of the ‘soft landing period’, which would be 31 March 2021 for those businesses on the March, June, September and December VAT quarter ends.
And from 1 April 2022 all businesses that are VAT registered will need to submit VAT returns through MTD compatible software.
Currently, such a requirement only applies to those with a taxable turnover greater than £85,000, the current VAT registration threshold.
Nick Hart, VAT director at Saffery Champness, said an extension to the digital links requirement was announced in March last year because of the Covid-19 crisis.
Further time was allowed for businesses that had moved to Making Tax Digital for VAT to have these links set up and running, he said.
“For many businesses this could be a complex procedure," Mr Hart explained.
"There will still be some that are holding records using different programmes or software and, despite the extension, will not yet have finalised that streamlining process.
"How might this affect a rural business? For example, where a business has a farm shop then the reconciliation of sales and receipts across businesses will have to be digital.
"The same may apply for bookings of holiday accommodation or other areas where separate business streams need to be amalgamated in accounting records.
“With HMRC having already extended the lead-in period once we anticipate that they may not be as flexible now where the necessary process changes have not been made.
"Penalties may be levied in the case of non-compliance.”
