Did you need to go digital?

With the first monthly VAT submission due a few months ago in June and the first quarterly MTD VAT submission due a few days ago on 7th August, we’ve heard of some people who were still unaware they needed to comply. Will there be a raft of fines sent out by the HMRC to businesses who haven’t submitted digitally or will there be any leniency? 

The official notice on MTD for VAT introduced a ‘soft landing’ on penalties for the first 12 months, but this is only in respect of the digital links used for transferring or exchanging data between programs, so claiming to be unaware of needing to submit digitally will fall outside of this scope. Indeed HMRC have the power to charge a penalty for failure to keep the required VAT records with a maximum penalty of £500. 

The HMRC also have the power to charge a penalty of up to £400 for filing a VAT return other than electronically without their prior agreement (VAT regulations 1995 reg. 25A), a power that’s not been used much but which will be extended to include using compliant software to file.

Again, a ‘soft landing’ approach is expected but only when a trader has made reasonable efforts to comply – saying you didn’t know you needed to is again unlikely to fit the bill. 

So if you find you should have gone digital but didn’t, please feel free to get in touch and we’ll help you get on the digital track.

Making Tax Digital – What you need to do

There’s been a lot of shouting about Making Tax Digital (MTD) kicking off on 1stApril, with HMRC trying to ensure everyone who needs to know, knows. Equally though, we’ve heard stories of people who are still using journal books saying “it doesn’t apply to us as we’ve not had a letter”. So maybe you’re one of the people that is unsure or doesn’t think it applies to them? 

Put simply, if you are a VAT registered business with a taxable turnover above the VAT threshold, you are required to use the MTD service from 1stApril 2019. There are a few small exceptions that can be found here but for the most part people must be using software to keep their records in a digital form and file their VAT returns using software. Importantly, copying and pasting information from one location to another features in the list of things that are NOT compliant when it comes to the final figures (so you can copy and paste during normal operations but you can’t copy and paste the figures to be submitted around, they have to transfer electronically). 

There’s a lot of information out there, not always in the clearest form, so if you need any help or advise please feel free to contact us, we’re here to help!