Making Tax Digital – are you compliant?

Melanie Richardson


Making Tax Digital will become a reality in 2019, after a series of delays and debates. From the 1st of April many businesses will have to comply with new processes. In a series of changes to the tax system, HMRC is hoping to bring about a more efficient, effective and easier process for businesses and individuals.


What is ‘Making Tax Digital’?

Making Tax Digital or (MTD) is a key part of the government’s plans to make it easier for individuals and businesses to get their tax right and keep on top of their affairs.

HMRC’s ambition is to become one of the most digitally advanced tax administrations in the world.


What does it mean for my business? (Making Tax Digital for VAT)

 At present, the first in a series of new processes will be introduced from the 1st of April 2019. This specifically affects VAT registered businesses with a taxable turnover above the VAT threshold. From this date, companies will be required to keep records digitally and use software to submit their VAT returns.


Sanctions for late submission & payment

Regulation 25A of SI 1995 / 2518 outlines the penalties for failure to make electronic returns. Where a trader fails to submit a VAT return via an electronic return system when required to do so a penalty will arise on each occasion based on the VAT-exclusive annual turnover as follows:


Annual VAT-exclusive turnover                            Penalty

£ 22,800,001 and above                                                   £ 400

£ 5,600,001 to £ 22,800,000                                          £ 300

£ 100,001 t0 £ 5,600,000                                                £ 200

£100,000 and under                                                         £ 100


No penalty will be due if the person can demonstrate that they had a reasonable excuse for failure to make the online return.


What can I do to make sure my business is compliant?

 If you are a client of Swindells and you will be affected by these changes, you will receive a letter giving further information and listing the actions to take, to ensure that your business stays compliant with regards to this first step: Making Tax Digital for VAT.


Your business may have manual records, spreadsheet records or unsupported software. For each business where this is the case, it will be essential to implement compliant software that will work with HMRC’s rules. This may come in the form of cloud accounting software, which you can view here:




What do I need to do if I’m not sure?


If you are unsure of your next steps or whether your software is compliant or not, you can get in touch with us in the usual ways to understand your position and how we can support you through this change


Helpful links:


Overview of Making Tax Digital



Making Tax Digital for VAT:

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