Packaging Design Studios Archives

Making Tax Digital for Packaging Studios: What Creative Agencies Need to Do Now

Posted on 19 November 202528 January 2026 by Maliha Javaid

As the UK tax system evolves, Making Tax Digital for packaging studios has become a critical part of ensuring VAT compliance. The MTD scheme requires businesses to maintain digital records and submit VAT returns through approved software. For creative agencies, including packaging studios, this means adopting new processes to stay compliant and avoid penalties. If your packaging studio is VAT-registered, it’s essential to understand these requirements and take the necessary steps to meet MTD standards.

At Apex Accountants, we specialise in helping businesses like yours navigate the complexities of MTD for creative agencies. With over 20 years of experience, we guide creative agencies and packaging studios through the compliance process, ensuring your VAT records are accurate, timely, and fully aligned with HMRC’s requirements.

In this article, we will outline the steps packaging studios need to take to meet MTD requirements, using real-life examples and practical solutions. We’ll also explain how Apex Accountants can support you in maintaining smooth, compliant operations. Read on to learn what your packaging studio needs to do now to stay ahead of MTD changes.

What is Making Tax Digital (MTD)?

Making Tax Digital (MTD) is a government initiative that aims to modernise the UK’s tax system. It requires VAT-registered businesses to keep digital records and submit their VAT returns via compatible software, rather than manually. The rules were rolled out for businesses with taxable turnover over the VAT threshold in April 2019 and were extended to all VAT-registered businesses, regardless of turnover, from April 2022.

For packaging studios, which often manage a variety of design and production-related transactions, MTD compliance is crucial to ensuring your VAT returns are accurate and submitted on time.

Why Packaging Studios Need to Act Now

Packaging studios are unique because they often deal with multiple stages in the production process—design, prototype creation, and final production—each of which may be subject to different VAT rates. To comply with MTD for creative agencies, it’s important to have the right tools and processes in place to track each transaction, the applicable VAT rate, and the time of supply.

Steps for Packaging Studios to Ensure MTD Compliance

To meet MTD compliance for packaging design companies, packaging studios must take the following steps:

1. Confirm VAT Registration Status

If your studio is VAT-registered, MTD applies to you. If you’re unsure about your VAT status or need to register, you can do so through HMRC. Even if your turnover is under the VAT threshold, you may still be required to comply with MTD if you’re VAT-registered.

2. Choose Compatible Accounting Software

MTD requires that you use compatible software to keep your records and submit your VAT returns. Simple spreadsheets are not enough unless they are linked to bridging software that can communicate with HMRC’s digital system. Popular MTD-compliant software includes Xero, QuickBooks, and Sage, among others.

3. Set Up Digital Links Between Systems

Ensure that your software links all of your business processes, from invoicing to expenses. These digital links must be secure and capable of transmitting data to HMRC’s system without manual intervention. You can no longer rely on manual input for data or paper records.

4. Record Every Supply and VAT Rate

For packaging studios, each part of a project (design, tooling, production) may have different VAT rates or timings of supply. You need to record the supply time, VAT rate, and value of each transaction separately. Use your software to automatically capture this data.

5. Submit Your VAT Returns Digitally

Once your records are set up, ensure that VAT returns are submitted via MTD-compliant software. Avoid using the HMRC portal for VAT submissions, as it will not accept submissions unless they’re routed through approved software.

6. Regularly Review Your Processes

MTD is an ongoing commitment. Regularly review your processes and software to ensure you’re staying compliant. This includes checking for any updates to tax rates or software changes, especially if you switch to new platforms.

Challenges for Packaging Studios

While MTD can seem like a daunting task, many packaging studios have successfully navigated it with the right tools. However, challenges still exist, such as:

Tracking Multiple Phases of Work: Packaging studios often manage complex, multi-stage projects. Each phase—whether it’s design, tooling, or final production—requires accurate VAT tracking.
Overseas Purchases: If you import materials or work with overseas suppliers, these transactions must also be recorded digitally.
Software Integration: Ensuring that your existing systems integrate seamlessly with your chosen MTD-compliant software can require additional setup time.

Case Study

A Manchester-based packaging studio faced challenges with Making Tax Digital (MTD) compliance due to its manual VAT tracking system, which was incompatible with the new requirements. The studio worked with Apex Accountants to implement MTD-compliant software (Xero), set up digital VAT record-keeping, and streamline their VAT return process. With multiple phases in their packaging projects and international suppliers, it was essential to ensure each supply, VAT rate, and transaction was accurately recorded.

By adopting cloud-based accounting and linking all systems digitally, the studio was able to automate VAT calculations and submit returns directly to HMRC. This shift significantly reduced the time spent on VAT submissions by 60% and eliminated the risk of errors. With Apex Accountants’ ongoing support and regular reviews, the studio avoided penalties, improved efficiency, and remains fully compliant with MTD compliance for packaging design companies.

How Apex Accountants Can Help with Making Tax Digital for Packaging Studios

At Apex Accountants, we specialise in supporting creative agencies and manufacturing businesses with MTD compliance. Our experts will guide you through:

Choosing the right software for your business needs
Setting up and linking your digital records correctly
Submitting your VAT returns on time
Avoiding common pitfalls in MTD compliance

With over 20 years of experience, we help packaging studios ensure they’re not only compliant but also positioned to thrive in the digital age. We offer personalised consultations and ongoing support for all your VAT and MTD-related needs.

Ready to make the shift to MTD?
Book your consultation today with Apex Accountants.

FAQs

Q1. Do all VAT-registered packaging studios need to comply with MTD?

Yes, all VAT-registered businesses must comply with MTD, regardless of their turnover. Since April 2022, MTD applies to all VAT-registered firms.

Q2. Can I still use Excel for VAT records under MTD?

You can use Excel, but only if it is connected to bridging software that communicates with HMRC’s system.

Q3. What software is compatible with MTD for VAT?

Common MTD-compatible software includes Xero, QuickBooks, and Sage. You can find a full list of approved software providers on HMRC’s website.

Q4. What happens if I don’t comply with MTD?

Failing to comply with MTD may result in penalties from HMRC, including fines for late submissions or incorrect records.

Q5. Can I get help from my accountant with MTD compliance?

Yes, accountants can help you select software, set up digital links, and ensure your records are maintained in compliance with MTD requirements.

Q6. How do I track VAT for multi-phase packaging projects?

Each stage of the project (design, production, tooling) must be recorded separately, with VAT rates and time of supply accurately logged.

HMRC Investigations for Packaging Design Companies: A Preventive Checklist to Protect Your Business

Posted on 19 November 202528 January 2026 by Farazia Gillani

Packaging design businesses play a vital role in turning creative concepts into reality, but they face unique tax challenges. Fluctuating revenues, complex supply chains, and variable cost structures can increase the risk of HMRC investigations for packaging design companies.

At Apex Accountants, we specialise in supporting creative and manufacturing businesses with tax compliance for packaging design businesses. With over 20 years of experience, we provide expert guidance to help your business stay compliant and reduce the risk of HMRC investigations. Our tailored services help you implement robust financial controls and maintain proper documentation, minimising the chance of unnecessary scrutiny from the HMRC.

This article presents a practical preventive checklist tailored to packaging design agencies. By following these steps, you can strengthen your financial controls, reduce the risk of an HMRC investigation, and protect your business from potential tax issues.

Why packaging design companies need specific attention

Packaging design businesses often operate at the intersection of creative services and manufacturing. They may handle design, materials sourcing, print finishing, and client‑managed production. That mix creates complex cost bases and revenue flows. Without sharp controls, anomalies may trigger interest from HMRC. Data shows that HMRC picks up:

Large income or expense fluctuations.
Consistent late filing or payment of tax obligations.
Inconsistencies across different tax filings (VAT, corporation tax, PAYE).
Industries with mixed service/manufacturing supply chains.

Because packaging design companies can have unusual cost structures (for example, tooling, sample runs, and variable material costs), the need for rigorous documentation is higher than average.

Factors Increasing HMRC Enquiry Risk for Packaging Businesses

Recognising the common triggers helps agencies act in time:

Filing returns late or making late tax payments.
Reporting large drops in turnover or unexplained cost increases.
Making unusual or high expense claims compared to the industry norm.
Inconsistencies between VAT and corporation tax submissions.
Operating in complex supply chains without supporting contracts or documentation.

Preventive checklist for packaging design businesses

Maintain organised and up-to-date bookkeeping.

Record each project invoice and link it to the job code and client.
Capture supplier invoices for substrate, print, finishing, and any outsourced labour.
Use digital accounting software and reconcile monthly.
Keep VAT records aligned with sales and costs.

Monitor revenue and cost trends

Set up a monthly gross margin review per project.
Document reasons for major cost changes (e.g., new material, design change).
Watch for sudden dips in turnover or rising cost of sales without justification.

Strong supplier contracts and documentation

For print or finishing subcontractors, retain signed agreements.
If you share revenue or profit‑share with clients or suppliers, document terms.
Where you import materials or deal with high‑value substrates, consider compliance issues (for example, any packaging tax) and keep evidence of sourcing.

File tax returns on time and consistently

File corporation tax, VAT, and PAYE on or before deadlines.
Avoid using estimates unless absolutely necessary—document any estimation process.
Review that VAT, corporation tax, and payroll filings tell a consistent financial story.

Prepare a narrative for any anomalies

If you shift the service model (for example, add prototyping), record board minutes or management notes.
If a major client project is delayed or cancelled, note the impact in internal records.
Maintain job‑by‑job cost variance analysis to explain changes.

Engage specialist tax advice

Work with experienced professionals to assess and strengthen your tax compliance and controls.
Consider a periodic tax health‑check to identify weak spots before HMRC contacts you.
If HMRC does make contact, consult a specialist early to shape responses and manage the process.

Case Study

A leading packaging design firm that specialises in sustainable packaging faced an HMRC tax investigation due to unexplained fluctuations in revenue and costs. The introduction of new materials and services created inconsistencies between their VAT filings and reported costs. The firm was concerned that the discrepancies might result in penalties or further scrutiny.

Apex Accountants stepped in to provide immediate support. We conducted a thorough review of the firm’s financial records, clarified the reasons behind the anomalies, and ensured all tax filings were up to date. We represented the firm during the investigation, liaising with HMRC to provide accurate explanations and necessary documentation. As a result, the investigation was closed without any penalties or further actions, giving the client peace of mind and stronger internal controls moving forward.

How Apex Accountants Supports You in HMRC Investigations for Packaging Design Companies

At Apex Accountants, we specialise in providing tailored financial services for manufacturing and design agencies. With years of sector-specific experience, we combine strict tax compliance for packaging design businesses with a deep understanding of the challenges faced by packaging design companies. Our support helps you build robust systems to reduce the HMRC enquiry risk for packaging businesses, maintain accurate records, and respond swiftly if HMRC raises questions.

Packaging design agencies often navigate complex financial and tax structures, and by following the preventive checklist we’ve outlined, you can significantly strengthen your position. From excellent bookkeeping and trend monitoring to supplier documentation and timely filing, our expertise ensures your business is well-prepared for any potential tax scrutiny.

At Apex Accountants, we are committed to supporting you every step of the way, providing expert advice and tailored solutions to keep your firm compliant and secure. Contact us today for a tax-compliance review and take the first step toward safeguarding your business against HMRC investigations.

A Guide to VAT for Packaging Design Agencies in the UK

Posted on 19 November 202525 November 2025 by Farazia Gillani

The packaging design industry sits at the intersection of creativity and commerce. From producing brand-defining visuals to coordinating printed packaging materials, agencies often work across borders and with clients from diverse sectors. This makes VAT for packaging design agencies particularly complex, especially when distinguishing between taxable services, exempt scenarios, and international supplies.

At Apex Accountants, we work closely with packaging design firms to offer clear, practical advice on VAT registration, invoicing, and compliance, complementing the kind of commercial guidance provided by the Design Business Association. Our team understands the industry’s challenges and supports better tax planning for creative agencies, helping them make confident, well-informed financial decisions.

In this article, we explain when packaging design services fall within the scope of VAT, when exemptions may apply, and how to manage international clients and mixed supplies. Whether you’re approaching the VAT threshold or already registered, this guide is designed to help you avoid costly mistakes and apply the rules correctly.

When You Must Apply VAT

You must register for VAT if your taxable turnover in the last 12 months exceeds £90,000.
If you expect your taxable turnover to exceed £90,000 in the next 30 days, you must register.
Once registered, you must charge VAT on standard‑rated services (normally 20%) unless the service is exempt or zero‑rated.
Many firms seek VAT registration for packaging design firms early to recover input VAT and establish professional credibility.

Specific Issues For Packaging Design Agencies

Determine the place of supply of your service. For business‑to‑business (B2B) services the place of supply is usually where the customer belongs.
If your client is outside the UK and the supply is B2B, the VAT may not be charged in the UK; the reverse charge might apply.
If your service involves providing design materials for export (for example, physical packaging sent abroad), you must check whether movement of goods or services is involved and whether zero‑rating or reliefs apply.

Understanding these rules is crucial for accurate billing and proper tax planning for creative agencies working across borders.

When Exemptions Or Special Treatments May Apply

Some services may be exempt from VAT; however, standard design services generally will not qualify for exemption.
If the service is outside the scope of UK VAT (for example, the place of supply is outside the UK), you do not charge UK VAT.
Even if you’re below the VAT threshold, voluntary VAT registration for packaging design firms allows you to reclaim input VAT and present a more professional image to clients.

Practical Checklist For Packaging Design Agencies

Monitor your taxable turnover monthly and annually
Establish whether the client is a business or consumer, and where they “belong”
On invoices clearly state your VAT registration number if registered, and show VAT separately
If supplying services to non‑UK clients, include details supporting place of supply outside the UK
If you supply packaging goods as well as design services, check whether the goods movement triggers different VAT rules

Incorrect VAT treatment can lead to penalties, incorrect pricing and lost profits. At Apex Accountants we support packaging design agencies in balancing compliance with commercial clarity.

Case Study: VAT Clarity for a Growing Packaging Design Agency

A packaging design agency based in Leeds contacted Apex Accountants after securing several international clients. Although their UK turnover remained just below the £90,000 threshold, they were unsure how to handle VAT for overseas B2B clients and whether they should register voluntarily. Their invoices lacked consistency, and they couldn’t reclaim VAT on essential tools and outsourced services.

We assessed their situation and advised them to register voluntarily for VAT so they could reclaim input VAT on UK costs. We also clarified the place of supply rules, helping them apply the reverse charge mechanism for EU clients and treat non-UK supplies correctly. With our support, they recovered over £4,700 in VAT, improved invoicing accuracy, and gained confidence in their international pricing structure.

The agency now operates with full VAT compliance, better cash flow, and a clearer financial strategy. Their creative team can focus on design while we manage the complexities behind the scenes.

What Makes Apex Accountants the Right Choice for VAT for Packaging Design Agencies

VAT compliance can be difficult for packaging design agencies, especially when dealing with international clients, digital-only services, and mixed supplies. At Apex Accountants, we combine profound sector knowledge with practical, up-to-date VAT guidance tailored to creative businesses. We help you apply the right rules, reclaim eligible costs, and avoid costly VAT errors.

Whether you’re just starting out or scaling your agency, our support gives you clarity and confidence in your VAT obligations. We take care of the complexities, from voluntary registration to invoice structure and input VAT recovery, so you can concentrate on your design work.