The deadline for Phase 2 of the Making Tax Digital mandate is approaching, however, there still appears to be ambiguity among tax professionals on the requirements. From a survey we conducted in October 2020 we found that over half of respondents were either 'somewhat aware' or 'not aware at all' of MTD phase 2 obligations.
Due to the lack of clarity surrounding phase 2 digital links requirement, we've created a guide 'Digital links. What are they and are you compliant?'. This in-depth eBook defines what a digital link is, as outlined by HMRC, and breaks down whether some of the most common VAT preparation methods are or aren't MTD phase 2 compliant. Spoiler alert, unfortunately copy and paste or cut and paste isn't digital link compliant.
In essence, think of digital links similarly to farm-to-fork in the agricultural supply chain. Both are looking for a crystal-clear connection between the source and end product, ensuring traceability throughout the entire process.
Our guide also gives a visual demonstration of how digital links work, with an example of compliant and non-compliant processes. It contains everything you need to know to ensure that your business is clear on its MTD phase 2 requirements.
Moving beyond compliance
We've mentioned a lot about compliance with the mandate, but this doesn't truly give the full picture as to why companies should invest in a tax solution. Yes, it's true that meeting the mandate is important, but MTD is about much more, it's about moving the tax function forward to a future of increased accuracy, transparency and efficiency through intelligent automation.
Many organisations are still using traditional, manual time-consuming methods to prepare, compile and submit their VAT returns. Tax technology can help to improve the efficiency of these workflows, giving valuable time back to the tax department. The additional resource and time that is freed up by this technology will allow the tax function to focus more on value-add tasks such as insight analysis and forecasting, creating wider business benefits.
If you'd like to read the full 'Digital links: What are they and are you compliant?' guide, then please click here.
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