All VAT-registered businesses are now required to file their VAT returns using MTD-compatible software and to keep their VAT records in a digital format. This applies from the start of the first VAT period for newly registered businesses.
The old VAT portal, which allowed you to type the VAT return figures directly into the online form, will be closed on 31 October. If you do submit your VAT return using the old portal before it closes, you may receive a penalty of between £100 and £400 (dependant upon turnover) for submitting the VAT return in the wrong manner.
A failure to keep digital records will only be discovered if HMRC inspects your VAT records, as the MTD system doesn’t require you to submit the underlying records to HMRC. However, don’t risk incurring the penalty for not keeping digital records, as it can amount to £15 per day of the failure.
If you are late submitting your VAT return or paying the VAT due, you will receive a surcharge on the second or third late submission or payment, depending on the business turnover. This surcharge increases on every subsequent offence, increasing from 2% to 15% of the outstanding VAT.
From 2023 the VAT surcharge system will be replaced with a points-based system for late returns. This allows up to three returns to be late with no penalty, but the fourth and any subsequent late filings will each attract a £200 penalty. The automatic penalties stop if no returns are late for 12 months.
Please talk to us if you need assistance in submitting your VAT return on time.
