Making Tax Digital for VAT: a checklist for the next return
Every VAT-registered business has been in MTD for VAT since 2022. Four years on, the same few problems still cause errors and penalties. A quick check before you file.
MTD for VAT asks for two things: digital records, and a digital journey from those records to HMRC. Copying a total from one spreadsheet into another by hand breaks that journey. Most businesses comply without thinking about it; the problems come from the workarounds.
Before you submit
- Bank accounts reconciled to the end of the period.
- Sales and purchase invoices dated in the right period, and nothing missing.
- VAT on imports, reverse charge items and fuel scale charges included where they apply.
- The VAT control account in your books agrees to boxes 1 to 5.
- Any error from an earlier return within the limits for correcting on this one, or reported separately.
Penalties for VAT returns
VAT late submission penalties use points, with a threshold set by how often you file: 2 points for annual returns, 4 for quarterly and 5 for monthly. At the threshold, each late return costs £200. Late payment penalties start at 3% of the VAT still unpaid after 15 days.
Show the data
| Annual (points) | 2 |
|---|---|
| Quarterly (points) | 4 |
| Monthly (points) | 5 |
From 1 April 2029, VAT-registered businesses will also need to issue and receive e-invoices, and have a Direct Debit in place for their VAT. Clean, digital VAT records now are the first step towards both.
Sources
This insight is general information, not advice for your circumstances. Talk to us before acting on it.