HMRC confirms MTD penalties from 1 November 2022

Aug 25, 2022
Stephen is one of the firm’s tax partners. He specialises in income tax, capital gains tax, corporation tax, inheritance tax, and stamp duty land tax. He also specialises in advising property and construction businesses.
HMRC confirm MTD penalties for VAT

Accountancy firms have been informed by HMRC that the “soft landing” penalty waiver for Making Tax Digital for VAT will be removed from 1 November 2022.

All businesses that file their VAT returns monthly or quarterly must now sign up to Making Tax Digital (MTD) and use MTD-compatible software to keep their VAT records and file their VAT returns.

Penalties may apply if customers are not following the correct process to file their VAT returns using MTD-compatible software from 1 November.

The amount businesses may be fined is dependent on their turnover. A penalty applies to each return filed incorrectly, and the penalty will be:

  • £100 if turnover is below £100,000;
  • £200 if turnover is between £100,000 and £5,600,000 inclusive;
  • £300 if turnover is between £5,600,001 and £22,800,000 inclusive; and
  • £400 if turnover is £22,800,001 or above.

*If clients are already exempt from filing VAT returns online (though these exemptions are very rarely approved by HMRC), or if they or their business are subject to an insolvency procedure, they are automatically exempt.

More from our tax experts

You can find all of our latest tax articles and tax resources here.

If you are looking for advice in a particular area, please get in touch with your usual Hawsons contact.

Alternatively, we offer all new clients a free initial meeting to have a discussion about their own personal circumstances – find out more or book your free initial meeting here. We have offices in Sheffield, Doncaster and Northampton.

Free initial meeting

Stephen Charles

Tax Partner, Sheffield

Related content

UK company size thresholds to increase

To cut complexity and burdens from legislative reporting requirements, the thresholds for company sizes in the UK are being increased by 50%. Following the Spring Budget, it has been announced by the Prime Minister Rishi Sunak that the company size thresholds will be...

The tax year ends on 5th April each year, why is this?

Well you can blame the Romans, especially Julius Caesar and Europe. Back in 1582 the Pope Gregory X111 commanded the change from the Julian calendar as there was a problem.  It ran for 30 or 31 days for 11 months and it was only February that had 28 days (29 every 4...