What Happens If You Don’t Comply with Making Tax Digital?

What Happens If You Don’t Comply with Making Tax Digital?

The transition to Making Tax Digital (MTD) is a significant change in how HMRC manages taxes in the UK. It is designed to simplify the process, reduce errors, and improve business productivity; it’s a step forward for self-employed individuals and landlords, too. But what happens if you don’t comply? Here, we explore the potential consequences and how to ensure you’re on the right side of the taxman.

Understanding Making Tax Digital

Making Tax Digital for Income Tax requires self-employed individuals and landlords to keep digital records and send simple quarterly updates to HMRC. Here’s why it matters:

• Reduce Errors: MTD aims to minimise mistakes, enhancing productivity and financial accuracy.

• Real-Time Information: Businesses gain access to up-to-date, accurate data, aiding towards better business planning.

• Improved System: HMRC transitions tax records to a new, streamlined system, providing a better customer experience.

• Funding Public Services: Ensuring everyone pays the correct amount of tax supports vital public services like the NHS and drives UK growth.

Consequences of Non-Compliance

Failing to comply with MTD requirements can lead to some serious repercussions, including:

1. Fines and Penalties:

   • Missing quarterly updates or failing to use MTD-compliant software could result in financial penalties.

   • Repeated non-compliance may escalate fines or prompt HMRC audits.

2. Increased Scrutiny:

   • Non-compliance may flag up additional checks, increasing administrative stress and time.

3. Loss of Business Productivity:

   • Operating outside MTD standards could hinder business growth and strategic planning.

4. Legal Action:

   • Persistent non-compliance may lead to legal proceedings being taken against you.

Key Dates and Requirements

To stay compliant, you need to:

• Use MTD-recognised software like Xero or QuickBooks.

• Provide quarterly updates summarising income and expenses, simplifying the process of year-end self-assessment tax returns.

• Align your accounting period with the tax year (6 April – 5 April or 1 April – 31 March).

• Comply by 6 April 2026 if your income exceeds £50,000 in the 2024–2025 tax year.

Voluntary sign-up is available for UK residents who meet the criteria, including being SA registered and having up-to-date tax records.

How Can We Help?

Navigating MTD can be overwhelming, but that’s where we come in. As experienced tax agents, we ensure you’re fully compliant with MTD regulations. Here’s how we can support you:

• Accurate and Timely Filing: We manage your digital records and quarterly updates, ensuring your tax returns are accurate and submitted on time.

• MTD-Compliant Software Setup: We help you choose and integrate the right software for your business needs with our affiliate programs where you can benefit from large discounts on softwares.

• Quick Turnaround: Our efficient processes ensure your records are updated promptly, reducing the risk of penalties.

• Tailored Support: We offer bespoke tax planning strategies to keep your finances in order.

Don’t let MTD compliance stress you out. Contact us today, and let’s ensure your business thrives in this new digital era.