The first phase of making tax digital required businesses to submit their VAT returns directly to HMRC, through the British tax authority's software. The second phase, which HMRC said Monday has now been suspended until April 2021, required businesses to link together all accounting software they used from the entry of the transaction until the submission of the VAT return.
VAT-registered businesses with turnover exceeding the £85,000 ($105,500) VAT threshold have been required to sign up to file their returns online and also keep digital records using compliant software.
The Chartered Institute of Taxation, a body of tax professionals in the U.K., said the later deadline is a welcome relief.
"Many businesses are working hard simply to survive these unprecedented times," Tina Riches, chairwoman of a committee on digitization at the institute, said in a statement.
Riches said some businesses, particularly those with legacy or complex systems, were struggling to meet the deadline for the second phase. The new deadline, she said, helps them "focus on managing the COVID-19 challenges rather than dealing with changes to how they keep their business records."
--Editing by Neil Cohen.
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