It has been confirmed by HMRC that as of 1st November 2022, those who have not signed up for Making Tax Digital for VAT will be served penalties.

HMRC’s Chief Executive, Jim Harra, said “I’m writing to let you know that from Tuesday 1 November 2022, your clients will no longer be able to use their existing VAT online account to file their quarterly or monthly VAT returns.

“If your clients do not sign up for MTD and file their VAT returns through MTD-compatible software, they may have to pay a penalty. The best way for businesses to avoid penalties is to start using MTD now.”

As well as this, non-electronic submissions of returns are subject to a £400 fine from HMRC.

In order to comply with the new rules, VAT-registered businesses must use MTD-compatible software to keep track of VAT transactions and submit VAT reports.

Penalty for Filing Through the Incorrect Channel (FTIC)

VAT-registered businesses that submit their VAT returns using non-MTD-compatible software may be subject to a FTIC penalty.

Penalty amount for businesses

The amount required to be paid by a business if they receive a penalty for each return submitted incorrectly, depends on their revenue.

  • Turnover below £100,000 = £100 penalty
  • Turnover between £100,000 and £5,600,00 inclusive = £200
  • Turnover between £5,600,001 and £22,800,000 inclusive = £300
  • Turnover £22,800,001 or above = £400

Businesses that submit quarterly or monthly VAT returns must register for MTD in order to submit returns after November 1.


This does not apply to anybody who is exempt from submitting online VAT returns. This is also applicable if they or their business are subject to an insolvency process.

If you need any help or support with Making Tax Digital, or anything accountancy related, please get in touch with us at