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New guidance on MTD VAT penalties


Published: 07 Jun 2022 Update History

HMRC has published a fact sheet on MTD VAT penalties, filling a gap in the information available on gov.uk.

HMRC’s fact sheet on MTD VAT penalties provides long overdue guidance on the penalties that apply to MTD VAT.

The fact sheet covers the filing method penalty that can be applied to businesses that fail to sign up to MTD VAT and continue to file their VAT return, other than using MTD functional compatible software. ICAEW’s Tax Faculty understands that HMRC will start to charge this penalty once all VAT records have been transferred to its new database later this year.

The general regulatory penalty that can be applied for failing to comply with MTD digital record keeping requirements (including the requirement for digital links) is also highlighted.

The fact sheet does not cover default surcharge or the new points based late submission and payment penalty system that will apply from January 2023.

Further detail is available in ICAEW’s guidance MTD for VAT penalties.    

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