Using functional compatible software

Under MTD, VAT returns must be filed using functional compatible software that can:

• record and store digital records;
• provide HMRC with information and VAT returns from the data held in those records;
• receive information from HMRC.

Failing to use such software may result in a penalty of up to £400 for every return that is filed.

Keeping records digitally

Failure to keep these records digitally, will result in a penalty of between £5 to £15 for each day that the requirement is not reached.

Using digital links to transfer or exchange data

Whenever data is transferred or exchanged within and between software programs, apps or products that make up functional compatible software, and that information forms part of the taxpayer’s electronic account, they must do this using digital links to transfer or exchange data electronically. This must not be done manually.

Use of ‘cut and paste’ or ‘copy and paste’ to select and move information is not a digital link.

Failure to do this correctly, may result in a penalty of between £5 to £15 for every day on which the requirement is not met.