Now VAT registered businesses have been drawn into the Making Tax Digital for VAT scheme, HMRC has issued guidance on how to avoid penalties for non-compliance.
Any businesses not complying with the Making Tax Digital (MTD) for VAT rules face a potential fine. Notably, there is a new £400 per return penalty for any business filing a return but not using compatible software.
There are also penalties for any business not keeping records digitally. HMRC may charge a penalty of between £5 to £15 for every day on which the business does not meet that requirement.
The guidance includes:
Filing VAT returns using functional compatible software
This means a software program, or set of software programs, products or apps that can:
Keeping 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 the electronic account, but you do not need to scan paper records like invoices and receipts.
MTD for VAT can be complicated, so if you would like any help or advice, get in touch with Swindon accountants at Optimum or Cheltenham accountants at Optimum.