The Making Tax Digital transition is now in full swing. All VAT-registered businesses must now file their returns via MTD-compatible software and file their VAT records digitally. For newly registered companies, this applies from the start of their first VAT period.
How To Stay Compliant With The Latest Regulations
Previously, VAT returns were submitted by typing the figures into a web-based form powered by software; this old web-based portal will now close on the 31st of October. If you submit your VAT return using this method before it closes, you may receive a penalty of £100 to £400.
You will also incur a surcharge if your VAT return is late or you pay your VAT bill late; this will apply to the second or third late submission or payment, depending on your business turnover. With every subsequent late filing or payment, the surcharge will rise from 2% to 15% of the outstanding VAT.
As mentioned above, the MTD regulations also require you to keep digital VAT records. If you submit your return wrong or not at all, it may prompt HMRC to inspect your VAT records. Should they spot VAT records not held in digital format, they can issue a penalty of up to £15 a day.
While it may seem tedious, complying with MTD for VAT regulations needn’t be onerous. A spreadsheet combined with bridging software would work perfectly well for smaller businesses, while an accounting software package would better suit larger, more complex organisations. Feel free to contact us if you have any questions regarding MTD, and we will happily pair you with the right solution.