{"id":7033,"date":"2026-01-08T15:53:09","date_gmt":"2026-01-08T15:53:09","guid":{"rendered":"https:\/\/www.sage.com\/en-gb\/blog\/?p=7033"},"modified":"2026-04-23T08:07:56","modified_gmt":"2026-04-23T07:07:56","slug":"what-is-an-mtd-digital-link","status":"publish","type":"post","link":"https:\/\/www.sage.com\/en-gb\/blog\/what-is-an-mtd-digital-link\/","title":{"rendered":"MTD digital links explained: Avoid penalties, understand how to move data"},"content":{"rendered":"<header class=\"entry-header has-dark-background-color entry-header--standard entry-header--has-illustration entry-header--has-illustration--standard\">\n\t<div class=\"container\">\n\t\t<div class=\"entry-header__row row align-center\">\n\t\t\t<div class=\"col col-lg-7 col-xlg-6 entry-header__content\">\n\t\t\t\t\t\t\t<div class=\"component component-single-header\">\n\t\t\t\t\t\t\t\t\t\t<div class=\"entry-header__misc text--subtitle text--uppercase text--small\">\n\t\t\t\t\t\t\t<a href=\"https:\/\/www.sage.com\/en-gb\/blog\/category\/money-matters\/\" class=\"entry-header__link\">Money Matters<\/a>\t\t\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t<div class=\"entry-title-wrapper\">\n\t\t\t\t\t<h1 class=\"entry-title\">\n\t\t\t\t\t\tMTD digital links explained: Avoid penalties, understand how to move data\t\t\t\t\t<\/h1>\n\t\t\t\t<\/div>\n\n\t\t\t\t\t\t\t\t\t<p class=\"entry-header__description\">\n\t\t\t\t\t\tTransferring key accounting data from one place to another isn&#8217;t quite as simple as you might think with Making Tax Digital. Here&#8217;s what you need to know.\t\t\t\t\t<\/p>\n\t\t\t\t\n\t\t\t\t\n\t\t\t\t\n\t\t\t<\/div>\n\n\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t<\/div>\n\t<div class=\"single-post-details container\">\n\t\t<div class=\"col\">\n\t\t\t<span class=\"posted-on \"><time class=\"entry-date published\" datetime=\"2026-01-08T15:53:09+00:00\">8 January, 2026<\/time><\/span><span class=\"reading-time\"> min read<\/span>\n\t\t<button\n\t\t\ttype=\"button\"\n\t\t\tclass=\"social-share-button button button--icon button--secondary js-social-share-button\"\n\t\t\tdata-share-title=\"MTD digital links explained: Avoid penalties, understand how to move data\"\n\t\t\tdata-share-url=\"https:\/\/www.sage.com\/en-gb\/blog\/what-is-an-mtd-digital-link\/\"\n\t\t\tdata-share-text=\"Please read this interesting article\"\n\t\t>\n\t\t\t<span class=\"social-share-button__share-label\">Share<\/span>\n\t\t\t<span class=\"social-share-button__copy-label\" hidden>Copy Link<\/span>\n\t\t\t<span class=\"social-share-button__copy-tooltip\" aria-hidden=\"true\" hidden>Copied<\/span>\n\t\t<\/button>\n\n\t\t\t\t<\/div>\n\t<\/div>\n<\/header>\n\n\n\n<div class=\"wp-block-post-author has-dark-background-color alignfull\">\n\t<div class=\"container\">\n\t\t<div class=\"col\">\n\t\t\t\t\t\t\t<div class=\"co-authors\">\n\t\t\t\t\t\n\t\t<div class=\"entry-author-wrapper\">\n\t\t\t<a class=\"entry-author\" href=\"https:\/\/www.sage.com\/en-gb\/blog\/author\/keirthomasbryant\/\">\n\t\t\t\t<img loading=\"lazy\" decoding=\"async\" width=\"40\" height=\"40\" src=\"https:\/\/www.sage.com\/en-gb\/blog\/wp-content\/uploads\/sites\/10\/2025\/06\/keir-short-hair-350x350.jpg\" class=\"entry-author__image\" alt=\"\" srcset=\"https:\/\/www.sage.com\/en-gb\/blog\/wp-content\/uploads\/sites\/10\/2025\/06\/keir-short-hair-350x350.jpg 350w, https:\/\/www.sage.com\/en-gb\/blog\/wp-content\/uploads\/sites\/10\/2025\/06\/keir-short-hair.jpg 760w\" sizes=\"auto, (max-width: 40px) 100vw, 40px\" \/>\t\t\t\t<span class=\"entry-author__name\">Keir Thomas-Bryant<\/span>\n\t\t\t<\/a>\n\n\t\t\t\t\t<\/div>\n\n\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t<\/div>\n<\/div>\n\n\n\n<p>The purpose of Making Tax Digital is, well, to ensure that businesses digitalise their VAT and Income Tax data and processes.<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><a href=\"https:\/\/www.sage.com\/en-gb\/blog\/mtd-for-income-tax-complete-guide\/\" target=\"_blank\" rel=\"noreferrer noopener\">What is Making Tax Digital for Income Tax? Read our complete guide.<\/a><\/li>\n<\/ul>\n\n\n\n<p>In order to ensure your taxes are digital, you also need to ensure transferring key accounting data from one place to another is not just done digitally. It must be done in a way that complies with the MTD digital linking rules.<\/p>\n\n\n\n<p>Most notably, this means the following breaches HMRC\u2019s MTD requirements and is not allowed:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Manually cutting\/copying and pasting key Income Tax or VAT accounting data after you&#8217;ve first entered it into any kind of software.<\/li>\n\n\n\n<li>Writing down this kind of data and then rekeying it into software.<\/li>\n<\/ul>\n\n\n\n<p>Getting caught doing the above, along with a few similar gotchas, could invite penalties from HMRC. The most typical example sure to catch out most people is copying certain kinds of accounting data from a spreadsheet to your accounting software.<\/p>\n\n\n\n<p>Are you one of the businesses doing digital linking the wrong way? And, if so, what can you do about it?<\/p>\n\n\n\n<p>Read this article to find out. Here&#8217;s what it covers:<\/p>\n\n\n<?xml encoding=\"utf-8\" ?><div class=\"wp-block-yoast-seo-table-of-contents yoast-table-of-contents\"><ul><li><a href=\"#mtd-anchor-link\" data-level=\"2\">What are MTD digital links?<\/a><\/li><li><a href=\"#digital-anchor-link\" data-level=\"2\">What is not considered an MTD digital link?<\/a><\/li><li><a href=\"#h-how-does-the-digital-linking-requirement-affect-mtd-for-income-tax\" data-level=\"2\">How does the digital linking requirement affect MTD for Income Tax?<\/a><\/li><li><a href=\"#link-anchor-link\" data-level=\"2\">MTD digital links: misunderstandings and myths<\/a><\/li><li><a href=\"#legal-anchor-link\" data-level=\"2\">What to do if your MTD digital links aren&#8217;t legal<\/a><\/li><li><a href=\"#spreadsheets-anchor-link\" data-level=\"2\">MTD digital linking for MTD and spreadsheets<\/a><\/li><li><a href=\"#h-final-thoughts-about-mtd-digital-links\" data-level=\"2\">Final thoughts about MTD digital links<\/a><\/li><\/ul><\/div>\n\n\n\n<div class=\"single-cta gated-content\">\n\t<div class=\"single-cta__positioner\">\n\t\t<div class=\"single-cta__wrapper has-dark-background-color\">\n\t\t\t<div class=\"single-cta__content\">\n\t\t\t\t\t\t\t\t<h2 class=\"single-cta__title h3\">E-Book: MTD for Income Tax\u2014The final countdown playbook for practices<\/h2>\n\n\t\t\t\t\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<a\n\t\t\t\t\t\thref=\"#gate-983aa507-78de-4b74-bc4d-ca90a0b2ff1f\"\n\t\t\t\t\t\tclass=\"single-cta__button button button--primary\"\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t>Get Making Tax Digital: The Final Countdown Playbook<\/a>\n\t\t\t\t\t\t\t<\/div>\n\n\t\t\t\t\t<\/div>\n\n\t\t\t\t\t<img decoding=\"async\" width=\"1215\" height=\"810\" src=\"https:\/\/www.sage.com\/en-gb\/blog\/wp-content\/uploads\/sites\/10\/2023\/09\/GettyImages-1392324314-1215x810.jpg\" class=\"single-cta__image\" alt=\"\" loading=\"lazy\" srcset=\"https:\/\/www.sage.com\/en-gb\/blog\/wp-content\/uploads\/sites\/10\/2023\/09\/GettyImages-1392324314-1215x810.jpg 1215w\" sizes=\"auto, (min-width: 48em) 33vw, 100vw\" \/>\t\t\t<\/div>\n<\/div>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"mtd-anchor-link\">What <strong>are MTD digital links?<\/strong><\/h2>\n\n\n\n<p>To be compliant with <a href=\"https:\/\/www.sage.com\/en-gb\/blog\/making-tax-digital-for-vat\/\">Making Tax Digital for VAT<\/a>, businesses typically needed to shift their accounting to MTD-ready software. And this is now true for MTD for Income Tax, too.<\/p>\n\n\n\n<p>But what if you use more than one piece of software? Perhaps you use one for record keeping and one for submission. Or what if you use spreadsheets for part or all of your accounting. How do you make everything work together in a legal way?<\/p>\n\n\n\n<p>A digital link is the solution.<\/p>\n\n\n\n<p>It occurs when the accounting records required for MTD are transferred between two digital places, such as software or computing devices. <\/p>\n\n\n\n<p>The rule is that key accounting data should only be entered once. After that, it should move in an automated, digital way.<\/p>\n\n\n\n<p>A digital link also applies to recapturing or modifying the data when moving it between two digital places.<\/p>\n\n\n\n<p>For example, a digital link exists when a business digitally transfers <a href=\"https:\/\/www.sage.com\/en-gb\/blog\/what-is-vat-uk-vat-basics-from-sage\/\">VAT<\/a> accounting data to their accountant so a partial exemption can be calculated.<\/p>\n\n\n\n<p>It also occurs when a business retains all transactions in a spreadsheet and uses a formula to calculate a total.<\/p>\n\n\n\n<p>There are strict rules on what defines an MTD digital link. According to HMRC, they have two characteristics:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Data is transferred electronically between software programs, products, or applications. This could include linked cells in a spreadsheet, such as a formula.<\/li>\n\n\n\n<li>The transfer is automated. It doesn\u2019t need manual intervention such as copying over the data by hand or manually moving data between two or more pieces of software. But you can, of course, click a button to initiate the process.<\/li>\n<\/ul>\n\n\n\n<p>When MTD for VAT was introduced, HMRC listed the following less obvious examples as digital links, although there are others too:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Emailing a spreadsheet so it can be imported into software.<\/li>\n\n\n\n<li>Using a memory stick or pen drive, even if you physically hand this to somebody else who then imports the data into their software.<\/li>\n\n\n\n<li>CSV or XML import and export, including the downloading and uploading of files.<\/li>\n\n\n\n<li><a href=\"https:\/\/www.sage.com\/en-gb\/blog\/glossary\/what-is-an-api\/\">API<\/a>: This is the technology used when software or computers talk to each other to transfer data. It\u2019s how <a href=\"https:\/\/www.sage.com\/en-gb\/accounting-software\/\">accounting software<\/a> talks to HMRC\u2019s computers in order to <a href=\"https:\/\/www.sage.com\/en-gb\/blog\/vat-return-making-tax-digital\/\">submit your VAT return<\/a>, for example.<\/li>\n<\/ul>\n\n\n\n<p>HMRC is keen on digital links not because it wants to make things more difficult. It wants to reduce the potential for errors.<\/p>\n\n\n\n<p>Fewer errors mean a reduced possibility of penalties for businesses and, of course, it means HMRC gets all the taxes it\u2019s due.<\/p>\n\n\n\n<p>The introduction of MTD digital links shows that HMRC was also pointing to how <a href=\"https:\/\/www.sage.com\/en-gb\/blog\/glossary\/what-is-automation\/\">automation<\/a> can help businesses.<\/p>\n\n\n\n<p>The more of your accounting that\u2019s automated, the more you can focus on building your business. In this way, HMRC hopes to <a href=\"https:\/\/www.sage.com\/en-gb\/blog\/solve-productivity-puzzle-business\/\">address the productivity gap<\/a> that businesses are struggling with.<\/p>\n\n\n\n<div class=\"single-cta gated-content\">\n\t<div class=\"single-cta__positioner\">\n\t\t<div class=\"single-cta__wrapper has-dark-background-color\">\n\t\t\t<div class=\"single-cta__content\">\n\t\t\t\t\t\t\t\t<h2 class=\"single-cta__title h3\">E-Book: Switching from Self Assessment to Making Tax Digital<\/h2>\n\n\t\t\t\t\t\t\t\t\t<div class=\"single-cta__description\">\n\t\t\t\t\t\t<p><!-- wp:paragraph --><\/p>\n<p>Worried about following MTD&#8217;s rules in April 2026? This brief yet comprehensive guide explains what you need to know: How you do accounting now, and how you should do it in future.<\/p>\n<p><!-- \/wp:paragraph --><\/p>\n\t\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<a\n\t\t\t\t\t\thref=\"#gate-3b52a309-fae9-49fa-a235-03fc76c551a0\"\n\t\t\t\t\t\tclass=\"single-cta__button button button--primary\"\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t>Get MTD for Income Tax: A Guide to Switching From Self Assessment<\/a>\n\t\t\t\t\t\t\t<\/div>\n\n\t\t\t\t\t<\/div>\n\n\t\t\t\t\t<img decoding=\"async\" width=\"1215\" height=\"810\" src=\"https:\/\/www.sage.com\/en-gb\/blog\/wp-content\/uploads\/sites\/10\/2023\/09\/GettyImages-1385092066-1215x810.jpg\" class=\"single-cta__image\" alt=\"\" loading=\"lazy\" srcset=\"https:\/\/www.sage.com\/en-gb\/blog\/wp-content\/uploads\/sites\/10\/2023\/09\/GettyImages-1385092066-1215x810.jpg 1215w\" sizes=\"auto, (min-width: 48em) 33vw, 100vw\" \/>\t\t\t<\/div>\n<\/div>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"digital-anchor-link\"><strong>What is not considered an MTD digital link?<\/strong><\/h2>\n\n\n\n<p>As mentioned, what is considered a digital link is perhaps surprisingly inclusive.<\/p>\n\n\n\n<p>But when MTD for VAT was launched back in 2019, HMRC said one thing is definitely not a digital link: \u2018cut and paste\u2019 or \u2018copy and paste\u2019 to select and move information, either within a software program or between software programs.<\/p>\n\n\n\n<p>There are slightly different rules for making VAT input\/output adjustments, as we\u2019ll explain in a minute.<\/p>\n\n\n\n<p>But it\u2019s otherwise correct to say that cut\/copy and paste must never be used in the presence of the <a href=\"https:\/\/www.sage.com\/en-gb\/blog\/making-tax-digital-faq\/\">accounting records<\/a>&nbsp;required for MTD for Income Tax, or VAT.<\/p>\n\n\n\n<p>Adjustments to the input or output tax are treated differently with VAT (notably, the specific adjustments are outlined in section 4.4 of the&nbsp;<a href=\"https:\/\/www.gov.uk\/government\/publications\/vat-notice-70022-making-tax-digital-for-vat\/vat-notice-70022-making-tax-digital-for-vat\">official VAT Notice<\/a>).<\/p>\n\n\n\n<p>The total of the adjustment must be kept as a digital record but the calculation you use to create it in a spreadsheet does not need to be digitally linked (although it should be retained for your VAT record keeping).<\/p>\n\n\n\n<p>Adjustments can be manually journaled into your VAT accounting.<\/p>\n\n\n\n<p>In other words, the above is the one instance in the world of MTD where it\u2019s OK to manually type figures or cut\/copy and paste (provided the data isn\u2019t pasted directly into one of the nine boxes of the actual VAT return, which isn\u2019t allowed under the MTD rules).<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-how-does-the-digital-linking-requirement-affect-mtd-for-income-tax\">How does the digital linking requirement affect MTD for Income Tax?<\/h2>\n\n\n\n<p>HMRC emphasises that, to be compliant with MTD for Income Tax, you&#8217;ll need to ensure the following is in place:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Digital records<\/strong>: Depending on your type of business, and its turnover, HMRC says you <a href=\"https:\/\/www.gov.uk\/government\/publications\/digital-record-keeping-notice-for-making-tax-digital-for-income-tax\/making-tax-digital-for-income-tax-digital-record-keeping-notice\">need to keep certain key accounting records relating to Income Tax in a digital format<\/a>. <\/li>\n\n\n\n<li><strong>Using MTD-ready software<\/strong>: You must create, store and correct digital records and send quarterly updates and a tax return via software that works with MTD for Income Tax.<\/li>\n\n\n\n<li><strong>Spreadsheets<\/strong>: <a href=\"https:\/\/makingtaxdigital.campaign.gov.uk\/making-tax-digital-software\/\">HMRC\u2019s guidance<\/a> explicitly says if you \u201cprefer to stick to spreadsheets or software you already use\u201d, you\u2019ll need to add-in bridging software to make it work with MTD for Income Tax\u2014although it recommends dedicated accounting software for &#8220;timesaving, user-friendly features&#8221;. <\/li>\n<\/ul>\n\n\n\n<p>However, while the emphasis from HMRC for MTD for Income Tax is on ensuring digital record keeping is in place, the rules around digital linking still apply. <\/p>\n\n\n\n<p>If you enter key accounting data into a spreadsheet, then the digital link starts there. After this, the data must be transferred digitally. No copy and paste. No writing it down and re-entering it. <\/p>\n\n\n\n<p>It does not comply with MTD requirements to subsequently copy and paste that data into accounting software, for example, or to write it down and then retype it into the accounting software. The data movement must comply with the digital linking rules, as outlined above. <\/p>\n\n\n\n<p>It does not comply with MTD requirements to copy and paste key Income Tax records between spreadsheets, either. This is one reason why using spreadsheets for your accounting becomes complicated under MTD and why it&#8217;s better to rely on a single, unified accounting app.<\/p>\n\n\n\n<p>When you&#8217;re rethinking how you do your accounting for MTD, bear all the above in mind. It&#8217;s much easier and simpler to create processes that don&#8217;t require any digital linking, than it is to have to apply digital linking rules at a later date.<\/p>\n\n\n\n<div class=\"single-cta gated-content\">\n\t<div class=\"single-cta__positioner\">\n\t\t<div class=\"single-cta__wrapper has-dark-background-color\">\n\t\t\t<div class=\"single-cta__content\">\n\t\t\t\t\t\t\t\t<h2 class=\"single-cta__title h3\">E-Book: Switching from Self Assessment to Making Tax Digital<\/h2>\n\n\t\t\t\t\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<a\n\t\t\t\t\t\thref=\"#gate-3b52a309-fae9-49fa-a235-03fc76c551a0\"\n\t\t\t\t\t\tclass=\"single-cta__button button button--primary\"\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t>Get MTD for Income Tax: A Guide to Switching From Self Assessment<\/a>\n\t\t\t\t\t\t\t<\/div>\n\n\t\t\t\t\t<\/div>\n\n\t\t\t\t\t<img decoding=\"async\" width=\"1215\" height=\"810\" src=\"https:\/\/www.sage.com\/en-gb\/blog\/wp-content\/uploads\/sites\/10\/2023\/09\/GettyImages-1385092066-1215x810.jpg\" class=\"single-cta__image\" alt=\"\" loading=\"lazy\" srcset=\"https:\/\/www.sage.com\/en-gb\/blog\/wp-content\/uploads\/sites\/10\/2023\/09\/GettyImages-1385092066-1215x810.jpg 1215w\" sizes=\"auto, (min-width: 48em) 33vw, 100vw\" \/>\t\t\t<\/div>\n<\/div>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"link-anchor-link\">MTD digital links:  misunderstandings and myths<\/h2>\n\n\n\n<p>Perhaps understandably, there\u2019s been some confusion about the ongoing MTD digital links compliance and the digital linking requirements. Let\u2019s clear up some misunderstandings, as follows.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Spreadsheets<\/h3>\n\n\n\n<p>Put simply, MTD does not mean the end of spreadsheets in your accounting.<\/p>\n\n\n\n<p>Spreadsheets can be used alone if they\u2019re MTD API-enabled so they can record and submit digital transactions. Bridging software is what provides this.<\/p>\n\n\n\n<p>Or spreadsheets can be used as part of a larger software suite, assuming there are digital links in place between all the software used. Remember: No copy and paste for the key accounting tax data!<\/p>\n\n\n\n<p>However, using spreadsheets for all of your VAT or Income Tax accounting can be problematic, as explained below\u2014see \u201cMTD digital linking for MTD and spreadsheets\u201d, below.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-manual-adjustments\">Manual adjustments<\/h3>\n\n\n\n<p>As mentioned earlier, getting digital linking right does not mean the end of manual adjustments for things like the VAT capital goods scheme, partial exemption and so on.<\/p>\n\n\n\n<p>Manual adjustments prior to submission are completely acceptable as long as digital links are in place.<\/p>\n\n\n\n<p>Here\u2019s a basic example.<\/p>\n\n\n\n<p>Based on the underlying transactions, my software records VAT box 1 as \u00a31,000.<\/p>\n\n\n\n<p>I then make a manual adjustment in my accounting for \u00a3100 (for which I have supporting evidence\/calculations), and the software automatically calculates that the revised box 1 figure is \u00a31,100.<\/p>\n\n\n\n<p>This is acceptable.<\/p>\n\n\n\n<p>What would not be acceptable is if, based on the underlying transactions, my software records VAT box 1 as \u00a31,000 and I then manually overwrite this figure with \u00a31,100.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"legal-anchor-link\">What to do if your MTD digital links aren&#8217;t legal<\/h2>\n\n\n\n<p>What do you do right now if you\u2019re using cut\/copy and paste for your MTD-related accounting?<\/p>\n\n\n\n<p>The answer might not be as drastic as simply avoiding the good old cut and paste.<\/p>\n\n\n\n<p>First, check if the data you\u2019re cut\/copying and pasting is that specified as a digital record for the purposes of either MTD for Income Tax, or VAT. Remember that MTD only affects your tax records, such as income and expenditure for MTD for Income Tax. It doesn&#8217;t affect all of your accounting data, such as sales records if yours is a retail business, or payroll records if you employ staff.<\/p>\n\n\n\n<p>Another example: VAT retail schemes only need to keep a digital record of their daily gross takings (DGT). The supplies that make up the DGT are outside the scope of MTD\u2019s record-keeping requirements. In other words, if you cut\/copy and paste data relating to these supplies then you can continue to do so.<\/p>\n\n\n\n<p>If you\u2019re using the VAT&nbsp;<a href=\"https:\/\/www.sage.com\/en-gb\/blog\/vat-flat-rate-scheme\/\">Flat Rate Scheme<\/a>, you don\u2019t need to keep digital records of your purchases (unless they\u2019re capital expenditure goods on which the input tax can be claimed). So, you can happily cut\/copy and paste data relating to these purchases.<\/p>\n\n\n\n<p>A rule of thumb for VAT is that MTD record-keeping requirements cease at the invoice or receipt level. For example, you can handwrite invoices, if you like, provided the transactional data is transferred to your digital VAT accounting solution as soon as possible.<\/p>\n\n\n\n<p>You need to transfer the tax point date, the value of the sale, the VAT rate applied, and the VAT element from the invoice.<\/p>\n\n\n\n<p>However, you should seek expert advice from an accountant or HMRC if you\u2019re uncertain about what constitutes digital records in your business. Remember, you could get penalised by HMRC if you get it wrong.<\/p>\n\n\n\n<p>Of course, the simple solution is to use&nbsp;MTD-ready software, like <a href=\"https:\/\/www.sage.com\/en-gb\/sage-business-cloud\/sage-accounting\/features\/tax\/\">MTD for VAT-compatible accounting software<\/a>. If you issue invoices from the software or log your supplies using it, then you don\u2019t even have to think about record keeping.<\/p>\n\n\n\n<p>Somebody else has sweated the details for you.<\/p>\n\n\n\n<p>When the time comes for your tax return to be submitted, you can simply click a button and, in most cases, everything will be filled in and ready to go.<\/p>\n\n\n\n<div class=\"single-cta\">\n\t<div class=\"single-cta__positioner\">\n\t\t<div class=\"single-cta__wrapper has-dark-background-color\">\n\t\t\t<div class=\"single-cta__content\">\n\t\t\t\t\t\t\t\t<h2 class=\"single-cta__title h3\">Can Sage make you a success?<\/h2>\n\n\t\t\t\t\t\t\t\t\t<div class=\"single-cta__description\">\n\t\t\t\t\t\t<p><!-- wp:paragraph --><\/p>\n<p>Learn for yourself how customers are enjoying success with Sage solutions that are transforming their businesses and helping them thrive.<\/p>\n<p><!-- \/wp:paragraph --><\/p>\n\t\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<a\n\t\t\t\t\t\thref=\"https:\/\/www.sage.com\/en-gb\/success-stories\/?Markets=&#123;84A0E19E-BE0A-41E8-8841-C20C3A69F52E&#125;&#038;page=1&#038;Products=&#123;CA2CE964-6A66-4DA4-8F8F-340FA28C51E3&#125;,&#123;E61B8273-2D42-45FE-A143-D52CB0827431&#125;,&#123;FB43EC9E-4B20-4F0D-BECF-55881FDCF4E4&#125;\"\n\t\t\t\t\t\tclass=\"single-cta__button button button--primary\"\n\t\t\t\t\t\t\t\t\t\t\t\t\tid=\"cta-id-28610\"\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\tdata-button-location=\"cta_box\"\n\t\t\t\t\t\t\t\t\t\t\t>Read their stories<\/a>\n\t\t\t\t\t\t\t<\/div>\n\n\t\t\t\t\t<\/div>\n\n\t\t\t\t\t<img decoding=\"async\" width=\"1214\" height=\"810\" src=\"https:\/\/www.sage.com\/en-gb\/blog\/wp-content\/uploads\/sites\/10\/2023\/09\/GettyImages-1181224214-1214x810.jpg\" class=\"single-cta__image\" alt=\"\" loading=\"lazy\" srcset=\"https:\/\/www.sage.com\/en-gb\/blog\/wp-content\/uploads\/sites\/10\/2023\/09\/GettyImages-1181224214-1214x810.jpg 1214w\" sizes=\"auto, (min-width: 48em) 33vw, 100vw\" \/>\t\t\t<\/div>\n<\/div>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"spreadsheets-anchor-link\">MTD digital linking for MTD and spreadsheets<\/h2>\n\n\n\n<p>Spreadsheets are computing\u2019s greatest gift to the world of accounting. But their use for accounting has obviously become problematic since the introduction of MTD.<\/p>\n\n\n\n<p>Some businesses have attempted to get around this by using&nbsp;<a href=\"https:\/\/www.sage.com\/en-gb\/blog\/glossary\/what-is-a-bridging-tool-or-bridging-software\/\">bridging software<\/a>&nbsp;that hooks into the spreadsheet and is able to submit updates or tax returns to HMRC digitally.<\/p>\n\n\n\n<p>Experts say bridging software has a limited life, ideally to ease transition to MTD processes, even though HMRC suggests it can be used indefinitely.<\/p>\n\n\n\n<p>Here\u2019s an example. Let\u2019s say you track your invoices using one spreadsheet and calculate your VAT using another spreadsheet. Getting data from one spreadsheet to the other is problematic if you can\u2019t use cut\/copy and paste.<\/p>\n\n\n\n<p>Spreadsheet formulas are considered MTD digital links, so you could build one to take the data from the invoice sheet automatically.<\/p>\n\n\n\n<p>But any experienced spreadsheet user will know this is a recipe for frustration. This kind of formula can break too easily. And it&#8217;s extremely easy to accidentally overtype cells, meaning the data or formula is instantly lost. <\/p>\n\n\n\n<p>Finding a new accounting system that can cope with this analysis would be a better long-term solution.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-final-thoughts-about-mtd-digital-links\">Final thoughts about MTD digital links<\/h2>\n\n\n\n<p>If you need expert advice, consult an accountant, VAT specialist or HMRC sooner rather than later.<\/p>\n\n\n\n<p>Penalties for incorrect accounting are very real and could end up costing your business. Any expense you might resent spending upfront should be considered alongside this.<\/p>\n\n\n\n<p>Is it really worth the risk of thousands of pounds, or even more, when you can not only fix things right now with a full accounting solution but also transform the way you work and make life so much easier?<\/p>\n\n\n\n<p><em>Editor&#8217;s note: This article was first published in December 2019 and has been updated several times for relevance.<\/em><\/p>\n\n\n\n<div class=\"single-cta gated-content\">\n\t<div class=\"single-cta__positioner\">\n\t\t<div class=\"single-cta__wrapper has-dark-background-color\">\n\t\t\t<div class=\"single-cta__content\">\n\t\t\t\t\t\t\t\t<h2 class=\"single-cta__title h3\">E-Book: Your Guide to MTD for Income Tax<\/h2>\n\n\t\t\t\t\t\t\t\t\t<div class=\"single-cta__description\">\n\t\t\t\t\t\t<p><!-- wp:paragraph --><\/p>\n<p>Our free guide is written by experts and is all you need as a sole trader or landlord to understand what MTD means for your business\u2014and how to ensure you&#8217;re ready in time.<\/p>\n<p><!-- \/wp:paragraph --><\/p>\n<p><!-- wp:paragraph --><\/p>\n<p><!-- \/wp:paragraph --><\/p>\n\t\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<a\n\t\t\t\t\t\thref=\"#gate-626d6b26-aa95-4f75-a5a0-9cce8bff833f\"\n\t\t\t\t\t\tclass=\"single-cta__button button button--primary\"\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t>Get Your Guide to MTD for Income Tax<\/a>\n\t\t\t\t\t\t\t<\/div>\n\n\t\t\t\t\t<\/div>\n\n\t\t\t\t\t<img decoding=\"async\" width=\"800\" height=\"450\" src=\"https:\/\/www.sage.com\/en-gb\/blog\/wp-content\/uploads\/sites\/10\/2025\/10\/cta-mtd-guide.jpg\" class=\"single-cta__image\" alt=\"A woman reading a guide about MTD for Income Tax\" loading=\"lazy\" srcset=\"https:\/\/www.sage.com\/en-gb\/blog\/wp-content\/uploads\/sites\/10\/2025\/10\/cta-mtd-guide.jpg 800w\" sizes=\"auto, (min-width: 48em) 33vw, 100vw\" \/>\t\t\t<\/div>\n<\/div>\n\n\n\n\n\n\n<div class=\"single-cta\">\n\t<div class=\"single-cta__positioner\">\n\t\t<div class=\"single-cta__wrapper has-dark-background-color\">\n\t\t\t<div class=\"single-cta__content\">\n\t\t\t\t\t\t\t\t<h2 class=\"single-cta__title h3\">Subscribe to the Sage Advice newsletter<\/h2>\n\n\t\t\t\t\t\t\t\t\t<div class=\"single-cta__description\">\n\t\t\t\t\t\t<p>Join more than 500,000 UK readers and get the best business admin strategies and tactics, as well as actionable advice to help your company thrive, in your inbox every month.<\/p>\n\t\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<a\n\t\t\t\t\t\thref=\"#gate-b1a63862-3fa0-4a5e-bb67-c76b88bbc6b8\"\n\t\t\t\t\t\tclass=\"single-cta__button button button--primary\"\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t>Subscribe now<\/a>\n\t\t\t\t\t\t\t<\/div>\n\n\t\t\t\t\t<\/div>\n\n\t\t\t\t\t<img decoding=\"async\" width=\"1440\" height=\"810\" src=\"https:\/\/www.sage.com\/en-gb\/blog\/wp-content\/uploads\/sites\/10\/2022\/04\/GettyImages-1073797282-1-1440x810.jpg\" class=\"single-cta__image\" alt=\"\" loading=\"lazy\" srcset=\"https:\/\/www.sage.com\/en-gb\/blog\/wp-content\/uploads\/sites\/10\/2022\/04\/GettyImages-1073797282-1-1440x810.jpg 1440w\" sizes=\"auto, (min-width: 48em) 33vw, 100vw\" \/>\t\t\t<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>Transferring key accounting data from one place to another isn&#8217;t quite as simple as you might think with Making Tax Digital. Here&#8217;s what you need to know.<\/p>\n","protected":false},"author":280,"featured_media":16323,"menu_order":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_sage_video":false,"post_featured_image_hide":false,"footnotes":""},"categories":[6,9],"tags":[29,30,343,342,27,28],"business_type":[4,115],"lilypad":[],"context":[],"industry":[],"persona":[67,72,73,74,75],"imagine_tag":[220,222,142,334,333,727,109],"coauthors":[369],"class_list":["post-7033","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-money-matters","category-strategy-legal-operations","tag-mtd-accountants","tag-mtd-business","tag-making-tax-digital-for-income-tax","tag-making-tax-digital-for-vat","tag-tax","tag-vat","business_type-small-business","business_type-accountants"],"sage_meta":{"region":"en-gb","author_name":"Keir Thomas-Bryant","featured_image":"https:\/\/www.sage.com\/en-gb\/blog\/wp-content\/uploads\/sites\/10\/2023\/09\/GettyImages-1464824741.jpg","imagine_tags":{"220":"Accountant accounting","222":"Accountant tax","142":"Making Tax Digital for businesses","334":"Making tax digital for income tax","333":"Making tax digital for VAT","727":"Self Assessment and Making Tax Digital for Income Tax","109":"Small business"}},"distributor_meta":false,"distributor_terms":false,"distributor_media":false,"distributor_original_site_name":"Sage Advice UK","distributor_original_site_url":"https:\/\/www.sage.com\/en-gb\/blog","push-errors":false,"_links":{"self":[{"href":"https:\/\/www.sage.com\/en-gb\/blog\/api\/wp\/v2\/posts\/7033","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.sage.com\/en-gb\/blog\/api\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.sage.com\/en-gb\/blog\/api\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.sage.com\/en-gb\/blog\/api\/wp\/v2\/users\/280"}],"replies":[{"embeddable":true,"href":"https:\/\/www.sage.com\/en-gb\/blog\/api\/wp\/v2\/comments?post=7033"}],"version-history":[{"count":3,"href":"https:\/\/www.sage.com\/en-gb\/blog\/api\/wp\/v2\/posts\/7033\/revisions"}],"predecessor-version":[{"id":29786,"href":"https:\/\/www.sage.com\/en-gb\/blog\/api\/wp\/v2\/posts\/7033\/revisions\/29786"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.sage.com\/en-gb\/blog\/api\/wp\/v2\/media\/16323"}],"wp:attachment":[{"href":"https:\/\/www.sage.com\/en-gb\/blog\/api\/wp\/v2\/media?parent=7033"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.sage.com\/en-gb\/blog\/api\/wp\/v2\/categories?post=7033"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.sage.com\/en-gb\/blog\/api\/wp\/v2\/tags?post=7033"},{"taxonomy":"business_type","embeddable":true,"href":"https:\/\/www.sage.com\/en-gb\/blog\/api\/wp\/v2\/business_type?post=7033"},{"taxonomy":"lilypad","embeddable":true,"href":"https:\/\/www.sage.com\/en-gb\/blog\/api\/wp\/v2\/lilypad?post=7033"},{"taxonomy":"context","embeddable":true,"href":"https:\/\/www.sage.com\/en-gb\/blog\/api\/wp\/v2\/context?post=7033"},{"taxonomy":"industry","embeddable":true,"href":"https:\/\/www.sage.com\/en-gb\/blog\/api\/wp\/v2\/industry?post=7033"},{"taxonomy":"persona","embeddable":true,"href":"https:\/\/www.sage.com\/en-gb\/blog\/api\/wp\/v2\/persona?post=7033"},{"taxonomy":"imagine_tag","embeddable":true,"href":"https:\/\/www.sage.com\/en-gb\/blog\/api\/wp\/v2\/imagine_tag?post=7033"},{"taxonomy":"author","embeddable":true,"href":"https:\/\/www.sage.com\/en-gb\/blog\/api\/wp\/v2\/coauthors?post=7033"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}