For years, many UK businesses have relied on a patchwork of spreadsheets and manual data entry to manage their taxes. It might not have been efficient, but it got the job done. With the rollout of Making Tax Digital (MTD), that era is definitively over.
Many businesses mistakenly believe that MTD is simply about submitting their VAT or Income Tax Self Assessment (ITSA) returns online. The reality is far more profound. MTD is a fundamental change to the way you are legally required to keep and submit your financial records. It gives HMRC unprecedented, direct visibility into your financial data.
And with that visibility, they can spot non-compliance with ease. Thinking you can get by with old methods is no longer a calculated risk—it’s a guaranteed way to attract the attention of HMRC. Let’s look at the three biggest red flags that are putting businesses on HMRC’s audit radar right now.
1. The Obvious Red Flag: Using Non-Compliant Software
The most basic requirement of MTD is that your financial records must be stored and submitted using MTD-compatible software. This is a non-negotiable, foundational rule.
The Old Way: Still managing your accounts on a disconnected desktop spreadsheet? Still manually keying in totals on the HMRC website? This is now a direct violation of MTD rules. It’s the easiest thing for HMRC’s systems to detect and immediately flags your business as one that is not taking its compliance obligations seriously.
✅ The Solution: A Fully Compliant Digital Platform The only way to comply is to operate on a platform that is officially recognized by HMRC and designed for MTD. At Accelus, we operate exclusively on fully MTD-compliant software. This guarantees that your records are kept in the correct digital format and that your submissions are transmitted directly and seamlessly to HMRC’s systems, ensuring they are accepted without issue, every time.
2. The Hidden Trap: Broken “Digital Links”
This is the rule that trips up most businesses. MTD mandates that the journey of your data—from the initial transaction to the final submission—must be digitally linked.
The Common Violation: If your process involves copy-pasting data from one spreadsheet to another, or manually exporting a report from one system only to key it into another, you have a broken digital link. This manual intervention is strictly forbidden under MTD rules. It’s seen as an opportunity for errors or manipulation to occur, and HMRC’s analytics can infer when these manual transfers are happening.
✅ The Solution: A Seamless, End-to-End Digital Journey True compliance requires an unbroken digital chain. Accelus ensures this seamless digital journey for your financial data. Our integrated systems mean that from the moment a sale or purchase is recorded, it flows through your books and into your tax return without manual interference. We maintain compliant digital links from source to submission, creating a transparent and unshakeable audit trail.
3. The Inevitable Consequence: Late or Incorrect VAT Submissions
The MTD system is smart. It’s designed to automatically cross-reference data and spot anomalies, making it easier than ever for HMRC to identify late or erroneous filings.
The Unforgiving System: In the pre-MTD era, a small error might have gone unnoticed. Today, the system is designed to catch them. Filing your VAT return late, even by a day, or submitting figures that are inconsistent with your previous returns, will trigger automatic penalty points and increase your risk score within HMRC.
The Solution: A Managed, Multi-Check Process The best way to avoid errors is with a robust, human-led review process built on top of great software. At Accelus, we guarantee timely and accurate VAT submissions through our managed, multi-check process. Before any submission is made, your data is reviewed by our experts to ensure accuracy and completeness, protecting you from the automatic penalties of the MTD system.
Get MTD Compliant. Stay Off HMRC’s Radar.
In the age of Making Tax Digital, hoping for the best is no longer a viable strategy. Compliance is about having the right systems and processes in place to ensure you are invisible to HMRC’s audit algorithms for all the right reasons.It’s time to move from risky manual workarounds to a secure, fully compliant digital solution that gives you complete peace of mind.
Worried your current process doesn’t meet HMRC’s strict MTD requirements?
Don’t wait for the penalty notice to arrive. Let’s review your setup and ensure you are 100% compliant. Get in touch with AccelUS today!