Important Information for Magic Tax Users – April 2021

Including important news for Limited Cost Traders or those in the Hospitality/Catering industry.

HMRC have detailed information on their website as to what constitutes as ‘Digital record keeping’ and how you should ensure compliance with these regulations. From April 2021 this will change what is and isn’t possible within Magic Tax.

HMRC does not consider the use of ‘cut and paste’ or ‘copy and paste’ to select and move information, either within a software program or between software programs, to be a digital link.

HMRC, VAT Notice 700/22: Making Tax Digital for VAT (Section 4.2.1 – Digital Links)

What does this mean for me?

Magic Tax users should be aware of how it will affect their use of the solution for their first return where the obligation period starts on or after 1st April 2021.

As a result, of the legislation, we have made changes to the Magic Tax system and users will not be able to upload using the ‘Standard Box Format’ template from their Apr/May/Jun return onwards. This simple template only asks for the data for boxes 1-9 of your submission and since this template relies on the copy/paste method it will no longer be considered a valid method to upload your data.

You will need to use either the Sales & Purchases template or the Sales, Purchases, Acquisitions & Goods Supplied template instead to keep digital records of each transaction within your business.

This is particularly important for the following users:

Limited Cost Traders

Limited Cost Traders have been able to file their vat returns using the Standard Box Format template in Magic Tax until now.
HMRC no longer deem this as an acceptable method to compile your data, as it relies on the copy & paste method, Limited Cost Traders should seek an alternative software solution for MTD for vat for their first return where the obligation period starts on or after 1st April 2021.

Filing for Jan/Feb/Mar, Feb/Mar/Apr, Mar/Apr/May?
You can still use the Standard Box Format for any of the above obligation periods, you will just need to source a new method before filing for Apr/May/June in July 2021.


The date-specific changes that the Government have made to the vat percentages for these industries because of the Coronavirus pandemic are not supported by Magic Tax.
Magic Tax does not have the functionality to manage these date-specific percentages, so companies in these industries should source an alternative software solution for MTD for vat.

All other Magic Tax users can continue to support Marie Curie by using Magic Tax to file their VAT returns.

You will just need to revert to the Sales & Purchases or the Sales, Purchases, Acquisitions & Goods Supplied template to keep your digital records and make your submissions. Magic Tax will simply pick up the transactions from your spreadsheet which fall into your obligation period.

KFA Connect will continue to support Magic Tax users for as long as Bridging Software is deemed as an acceptable means of filing by HMRC. Having said that we would also encourage users to source a long-term solution to Making Tax Digital for vat – as we are aware that bridging software is not future-proof and how long it is viable will be dictated by HMRC.

We will keep you posted of any further changes to the Magic Tax system.

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