HMRC have issued guidance for VAT-registered businesses and their agents on how to avoid penalties for non-compliance with the Making Tax Digital for VAT (MTD) rules.
In particular, there is a new £400 per return penalty if you file a return but do not use functional compatible software.
There are additional penalties if the business does not keep its records digitally. HMRC may charge you a penalty of between £5 to £15 for every day on which the business does not meet that requirement.
Key extracts from HMRC guidance include:
You must file your VAT return using functional compatible software
Functional compatible software means a software program, or set of software programs, products or applications (apps) that can:
You must keep records digitally
You must keep some records digitally within your functional compatible software. This is known as your ‘electronic account’. Your electronic account must contain:
All transactions must be contained in your electronic account, but you do not need to scan paper records like invoices and receipts.
Find out more information about the new charges on the GOV.UK
Need help with MTD for VAT?
Our team are Xero MTD for VAT certified, and have been completing compliant VAT returns on major accounting softwares ever since MTD for VAT came into effect.
Get in touch today on 0121 667 3882, or email our Business Development Manager at charlie.sangha@informaccounting.co.uk.
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