VAT News

HMRC Penalties – Not getting your Making VAT Digital processes compliant


With the roll out of the Making VAT Digital rules complete across the UK HMRC have now listed a note to remind taxpayers of the Penalties they will incur if they fail to comply to the internal digital links build up and submission of VAT returns.

HMRC comments on the range of penalties that non-compliant bodies will face including:

  • Up to £400 for every return filed without the use of “functional compatible software” – that means software that will:
    • Record and store digital financial records
    • Provide that VAT return information to HMRC through a digital link
    • Receive information from HMRC
  • A penalty of between £5 - £15 per day for:
    • failing to maintain an “electronic account” – that’s there to store all the details of your sales and purchases basically, along with your business information and VAT related adjustments to returns
    • not using digital links to transfer data between pieces of software
  • As a final warning the note states:
    • “If you file a return that contains errors you will have to pay back the VAT you owe. We may also charge you a penalty of up to 100% of the VAT you owe.”

You’d hope for a “light touch” to be applied for businesses struggling with a shortage of resources and the current economic climate, who are still not quite there yet in their Making VAT Digital journey and certainly our advice would be proactive in checking the compliance of your VAT systems in this regard. Should problems with HMRC then do review and look to challenge any VAT assessments and penalty calculations. The ability to negotiate penalties down and achieve suspension should always be considered in our experience.

Across the Xeinadin Group we have locally based accountancy hubs, well versed in accounting software programs that will meet the Making VAT Digital requirements, that can help at the systems level and – of course – a dedicated VAT team of specialists here at Centurion when VAT gets complicated in this regard.


For the avoidance of doubt, the content recorded in this news article does not constitute formal advice and we do not guarantee the accuracy of any information provided at the time of reading. It is always recommended that you seek professional advice before acting on any of the news articles or information included.

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