MTD FOR VAT

Information
  • 12 Sep 2021
  • 2 Comments
24JAN

MTD for VAT

Making Tax Digital (MTD) is the approach through which HMRC aims to transform the tax system. Since April 2019 most VAT-registered businesses with taxable turnover above the current VAT threshold (£85,000) are required to follow the Making Tax Digital rules by keeping digital records and using software to submit their VAT returns. It’s not vital for businesses below the threshold, but they can participate voluntarily.

Since April 2022 all VAT-registered businesses are required to follow the Making Tax Digital rules (regardless of turnover) until and unless they are already exempt.

  • Exemption from MTD for VAT:
  • What happens if I don't comply with MTD?
Exemption from MTD for VAT:

You’re mechanically exempt from Making Tax Digital for VAT and do not need to apply if :

  • you’re already exempt from filing VAT Returns online
  • you or your business are subject to an insolvency procedure
What happens if I don't comply with MTD?

If you don’t comply with the rules and meet Making Tax Digital deadlines, you may lay yourself open to a fine.

From January 2023, HMRC is moving to a points-based system where penalties are given to only those who regularly make mistakes and miss deadlines. This means that those who make the occasional errors will not be penalized.

This system works on how regularly you submit. You can find more information about penalties here : https://www.gov.uk/government/publications/penalties-for-late-submission/penalties-for-late-submission .