Based on our recent experience, one of the more common HMRC compliance requests is checking compliance with Making Tax Digital (“MTD”) for VAT, and officers are increasingly likely to apply penalties for failure to comply.
MTD for VAT requires all VAT registered businesses to keep records digitally and file their VAT returns using software.
The rules dictate that VAT registered businesses must maintain functional compatible software (this being a software program, product or application or any combination or set of these) which is capable of recording and preserving digital records, and providing HMRC information and returns from data held in those records using an API platform and receiving information from HMRC, using an API platform.
Now that MTD has been around for a while it appears that HMRC has tightened its policy on applying penalties if MTD requirements are not being met. There are three types of MTD penalties:
Our VAT team can review your VAT returns preparation process to identify potential risks and confirm compliance with the UK’s Making Tax Digital (“MTD”) rules.
The scope of an MTD compliance review could include the following:
If you would like to discuss MTD for VAT in more detail, please contact our VAT team and we will be more than happy to help you.