What You Need to Do If Your Business Not MTD Compliant Yet

What is “MTD” for VAT?

HMRC has introduced MTD from beginning of April, to make easier and more effective for individual and businesses to declare and record their tax. For the VAT registered businesses whose taxable turnover is above the threshold limit have to keep certain digital records and must file their VAT returns directly from these digital systems. VAT registered businesses have to record their transactions digitally and file VAT return using the compatible accounting software. So keeping the records digitally and submit VAT return from the software is called MTD (Making Tax Digital).

This is an important change for the taxation system to make sure no typing mistake in VAT figures on HMRC website and it intends to enhance accuracy and reducing the avoidable mistakes. In reference to income, the date of supplies, their value and rate of VAT charged has to be recorded by software. Same for expenses the date of the supply, value and amount of VAT to be reclaimed has to be recorded.

MTD doesn’t remove the necessity to keep and maintain records digitally, specific to those schemes, businesses or retailers.

What Is The Recent Penalty?
The current penalty for failing to submit a return through MTD-approved software can be up to £400 so it is important that you get MTD registered and become compliant at earliest. 

What Will be the Penalties?

A new penalty point system will come into effect from January 2023 which will speeding fine amount. Under this new rule, businesses will be fined one point for every late submission & once it reach to certaine number of points, £200 penalty will be charged. Points will be expired after 2 years and maximum number of points you can receive before being issues a fine will vary depending on how regular your submission are. 

How I Get My Business MTD Compliant?

if you are not sure whether your businesses should be MTD Compliant or not, contact your UK accountants today. Here is the brief guidance which will help you to know. 

If you’re sceptical whether your firm needs to be MTD compliant, take a look at this handy compliance checker for guidance. First you need to decided which MTD-complaint software you should opt-in. Every software have it’s own advantages and with different suits. You have to compare them all to get the best fit software for your business.