UK tax authorities have issued a checklist to help you avoid penalties when complying with Making Tax Digital for VAT.
The new electronic tax system can help businesses manage their VAT more efficiently, if they follow basic guidelines.
Why you need fully compatible VAT software
The UK’s Making Tax Digital system now extends to all VAT-registered businesses.
Authorities say MTD for VAT makes compliance simpler and more cost-effective. And for many businesses, it does precisely that. However, there’s an important caveat. Research shows that MTD is only more efficient when businesses use fully compatible software.
According to the new HMRC checklist, using the appropriate software when filing VAT returns is a critical part of meeting new compliance rules.
According to HMRC, “if you file your returns, but do not use functional compatible software, we may charge you a penalty of up to £400 for every return you file.”
Digital record keeping is mandatory
In order to comply with MTD for VAT, businesses are also obliged to keep digital records of transactions.
Records must indicate a comprehensive set of data. This includes VAT on goods and services supplied, VAT on goods and services received, and the time of value of supply for each item you bought or sold.
If you do not keep digital records, you may be charged a penalty.
And end-to-end VAT technology solution
VAT IT provides both the technology and expertise to optimise your company’s VAT processes. Our end-to-end VAT compliance service ensures you are always 100% compliant, everywhere you do business. And our next generation VAT recovery and compliance platform makes managing VAT seamless and simple.
Get in touch with VAT IT for the support, strategic advice and technology you need to stay two steps ahead of changing VAT regulations.