Making Tax Digital - Phase 2 postponed until April 2021

30 March 2020

Many businesses will have been working hard to try and meet the 1 April 2020 deadline for the end of HMRC’s Making Tax Digital (MTD) for VAT soft-landing.  This was the date from which taxpayers had to have a complete digital audit trail under MTD.

In light of the ongoing COVID-19 crisis, HMRC has decided to postpone the requirement for VAT registered businesses to digitally link their VAT return processes, from data source to VAT return (the so-called Digital Journey), until 1 April 2021.

Phase 1 of HMRC’s MTD requirements, was that VAT return submission data should be sent electronically, via an API interface, to HMRC.   Phase 1 applied from 1 April 2019 for most businesses.

Phase 2 was the completion of the Digital Journey.  Under this stage, any manual intervention in the data journey and VAT return completion process was to be eliminated.  The deadline for most businesses, following the 12 month soft-landing period was 1 April 2020.  For certain businesses, there was a 6 month deferral in relation to each of those stages.

The extension is in addition to the recently announced VAT deferral and provides further welcome relief for businesses at this time.  

Importantly, the Digital Journey is still a requirement and all VAT registered businesses should now ensure that they have all necessary digital links in place to allow the full Digital Journey by 1 April 2021. 


If you are unsure about what Government support package is available to your business, we are here to help. We have created a simple toolkit that cuts through the noise and makes you aware of exactly what help is available to you. It takes a few minutes to fill out and you can find it on our COVID-19 Information hub

This is very difficult period for all businesses and AAB is here to support and help you through it. If you have concerns about complying with this requirement, please contact Alistair Duncan ( or your usual AAB Contact.

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