As we know, all VAT registered businesses are now required to file VAT returns using MTD-compatible software and keep VAT records in a digital format. This applies from the start of the first VAT period for newly registered businesses.
Previously, we would submit VAT returns by typing the figures into a web-based form and some software would perform this function. Note that the old web-based portal will close on 31 October and if you submit your VAT return using the old portal before it closes you may receive a penalty of between £100 and £400 for submitting your VAT return in the wrong format.
If your VAT return is late, or you pay your VAT bill late, you will receive a surcharge on the second or third late submission or payment, depending on the business turnover. This surcharge increases on every subsequent late filing or payment from 2% to 15% of the outstanding VAT.
Digital VAT records
The other requirement under the MTD regulations is to keep digital VAT records. HMRC may inspect your VAT records if you submit your VAT return in the wrong format or don’t submit them at all. Where the VAT records are not held in a digital format HMRC can issue a penalty of up to £15 per day.
Complying with the MTD for VAT regulations doesn’t need to be difficult. A spreadsheet plus bridging software suffices for simple businesses but an accounting software package may be a better solution for a complex business.
Looking for further advice on complying with the MTD for VAT regulations? Get in touch with a member of the team today.