Understanding Making Tax Digital (MTD) compliance

Making Tax Digital (MTD) is a key part of the UK government's plan to make it easier for individuals and businesses to get their tax right and keep on top of their affairs. MTD for VAT is now mandatory for nearly all VAT-registered businesses.

Who Must Comply?

As of April 2022, all VAT-registered businesses must sign up for Making Tax Digital for VAT, regardless of their turnover. You must keep digital records and use MTD-compatible software to submit your VAT returns.

WeFile as Compatible Software

WeFile is an HMRC-recognised MTD-compatible software solution. By connecting your account and submitting your 9-box figures through our platform, you fulfill the digital submission requirement of the MTD legislation.

Digital Record-Keeping

MTD requires that you keep your underlying business records digitally. This means using accounting software or structured spreadsheets to record every sale and purchase. You cannot keep manual, paper-based records and then simply type the final 9 boxes into software. There must be a 'digital link' from your raw transactions to the final submission.

Penalties for Non-Compliance

HMRC operates a points-based penalty system for late submissions and late payments under MTD. Accruing too many points will result in fixed financial penalties. Furthermore, failing to keep adequate digital records can result in severe compliance fines. Using WeFile helps ensure your submissions are timely and correctly formatted.