Category: Making Tax Digital

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

Posted on by Malaika Sohail

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.

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 Update on Making Tax Digital: The ‘Biggest Change’ to Income Tax in 30 Years

Posted on by Waheed Ahmed

The UK government is preparing to roll out Making Tax Digital (MTD), a transformative update to the country’s tax system. Starting next year, certain taxpayers will be required to use this digital platform to record and submit their tax information. This change will affect businesses, self-employed individuals, and landlords, fundamentally altering the way they interact with HMRC. Currently, thousands of volunteers are trialling the system, and in response to their feedback, the HMRC Update on Making Tax Digital has been released, outlining key adjustments designed to make the transition smoother for all involved. 

These Making Tax Digital changes aim to ensure a more accurate, efficient, and user-friendly system for everyone who engages with the UK tax process.

Why is MTD a Game-Changer?

The shift to Making Tax Digital for Income Tax (MTD for ITSA) represents the most significant change to the UK income tax system in over 30 years. Under MTD, taxpayers will no longer rely solely on submitting a single annual self-assessment tax return in the traditional format. Instead, they will provide quarterly digital updates on their income and expenses through HMRC-approved software, helping to streamline the tax process, reduce errors, and ensure more timely reporting. 

However, taxpayers must still submit an annual final declaration after the quarterly updates, which reconciles and confirms all income, expenses, allowances, and tax liabilities for the year. This final digital submission replaces the traditional annual tax return and completes the tax reporting cycle under the new MTD regime, effective from April 2026.

Key Updates from Testers’ Feedback

HMRC has been conducting trials of the MTD system, with a focus on improving its functionality and addressing user concerns. Participants’ feedback has led to the implementation of several important changes:

Improved Communication: 

Testers requested better communication from HMRC about their submissions. In response, HMRC has now introduced a quarterly newsletter for participants. Throughout the trial period, testers will receive updates, guidance, and answers to frequently asked questions through this newsletter.

Confirmation of Submissions: 

Another concern raised by testers was the lack of confirmation receipts after submitting their quarterly updates. Currently, no confirmation emails are sent to acknowledge receipt of the submission. HMRC acknowledged this issue and responded by saying that, although some software products may already provide these confirmations, taxpayers and agents can check the status of their submissions at any time via their digital tax accounts. HMRC has also committed to updating its guidance to make this process clearer.

Expanded Customer Support: 

Testers pointed out that there are more diverse support options as the number of participants grows. In response, HMRC has introduced a comprehensive support model for participants. This includes a dedicated customer support team to assist testers with any issues they may encounter during the trial phase. This support will continue once the system becomes fully operational.

Multiple Agents for Different Submissions: 

Participants also pointed out the need for functionality that allows multiple agents to manage different aspects of their tax submissions, such as one agent for quarterly updates and another for end-of-year filings. HMRC has been trialling this feature and will refine it before the system’s official rollout.

What’s Happening During the Testing Phase?

The testing phase, which began in April 2025, focuses on fine-tuning the platform’s capacity to handle high user volumes. HMRC has been trialling the sign-up process to ensure that the system can accommodate a large number of participants, and since August 2025, users have been able to submit their first quarterly updates using MTD software.

During the testing phase, HMRC has been checking that estimated payments are correct and making sure the system can perform certain actions in the digital tax account, like adding or stopping an income source and choosing to join or leave the service.

Key Features of MTD for ITSA

Once fully operational, Making Tax Digital for Income Tax (MTD for ITSA) will enable businesses, self-employed individuals, and landlords to:

  • Maintain Digital Records: Users will be required to maintain digital records of their income, expenses, and other financial details.
  • Submit Tax Returns via Software: Tax returns will be submitted through MTD-compatible software, which will eliminate the need for paper-based recordkeeping.
  • Access Digital Tax Accounts: Taxpayers will manage their accounts and submissions through a secure digital tax account, offering more transparency and ease of use.

What Does This Mean for the Future of Tax Reporting?

The HMRC’s push for digital tax reporting reflects a broader effort to modernise the UK’s tax system. The move to MTD will simplify and streamline processes for many taxpayers, although there are concerns about the impact on smaller businesses and those less familiar with digital tools. However, HMRC is confident that these changes will provide long-term benefits, including:

  • Fewer Errors: Digital submissions and more frequent updates reduce the risk of errors that often occur during the annual self-assessment process.
  • Faster Processing: Real-time data collection allows HMRC to process returns more quickly and respond to issues faster.
  • Better Engagement: Taxpayers will engage with their tax records more regularly, making it easier to manage their financial obligations.

What Should Taxpayers Do Now?

The official rollout of MTD for ITSA is scheduled for April 2026. However, taxpayers who meet the required criteria have been using the system voluntarily since 2024. To prepare for the transition:

  • Check Eligibility: Ensure you meet the thresholds for MTD compliance (e.g., self-employed or earning over £10,000 annually from property income).
  • Select MTD-Compatible Software: Research and choose software that will enable you to record income and submit quarterly updates digitally.
  • Start Digital Record-Keeping: Begin maintaining digital records of your income and expenses if you haven’t already.

Why Apex Accountants is the Right Choice Following the HMRC Update on Making Tax Digital

With the HMRC update on MTD, businesses and self-employed individuals must adapt to new tax reporting rules. At Apex Accountants, we specialise in helping clients navigate these Making Tax Digital changes smoothly:

  • Expert MTD Knowledge: Stay ahead with our in-depth understanding of MTD requirements and HMRC compliance.
  • Tailored Solutions: We offer personalised MTD services, from selecting the right software to submitting quarterly updates.
  • Seamless Digital Transition: Let us handle the shift to digital tax reporting, ensuring your records are compliant.
  • Proactive Tax Planning: Maximise tax reliefs and minimise liabilities while staying compliant with MTD.
  • Ongoing Support: We provide continuous guidance to ensure smooth MTD compliance and updates from HMRC.

Contact us today to ensure a smooth transition to Making Tax Digital and keep your business compliant and efficient.

How MTD for Casting Agencies Impacts VAT and Tax Reporting

Posted on by Sidra

Casting agencies occupy a unique space among talent, production companies and clients. As Britain modernises tax reporting, they must adapt quickly to stay compliant and avoid penalties. Making Tax Digital (MTD) isn’t just another rule change; it marks a shift towards real‑time, digital record keeping across all taxes. Here’s what casting directors need to know about MTD for casting agencies and how it links to the wider reform coming in 2026.

What MTD for VAT requires now

MTD for VAT aims to cut errors and make tax reporting easier. Since April 2022 every VAT‑registered business must keep digital records and file VAT returns via HMRC‑approved software. This requirement originally only applied to businesses over the VAT threshold (£85k, now £90k), but from April 2025 it extends to all VAT‑registered businesses, even those earning under £90k. You must:

  • Use compatible software: Paper or handwritten records no longer meet the rules. HMRC‑approved software – such as Xero, QuickBooks, FreeAgent or bridging tools – records your transactions and submits VAT returns automatically.
  • Keep digital records: Store sales, purchases, VAT rates, dates and values electronically for at least six years.
  • File on time: VAT returns are still quarterly. The deadline is one month and seven days after the end of each VAT period.
  • Avoid penalties: Late filings now accrue penalty points; late payments attract a staged penalty – 2 % of the VAT owed if paid 16–30 days late and 4 % if outstanding for more than 31 days.

These rules apply whatever your turnover. Only businesses with no internet access, certain disabilities, religious objections or insolvencies may be exempt.

Looking ahead to 2026: MTD for Income Tax

The next phase of Making Tax Digital targets income tax. From April 2026 on, self-employed individuals and landlords with annual gross incomes over £50,000 must maintain digital records and send quarterly updates to HMRC. The threshold falls to £30 000 in April 2027. Many casting agency owners operate as sole traders or landlords in addition to their agency role. This means your personal tax affairs will also move to real‑time digital reporting.

Why MTD for casting agencies matters

Casting businesses have complex income streams. You might bill clients for casting fees, talent commissions, buy-through fees, and travel recharges. You might receive payments on behalf of talent and pass these on. Each category has a different VAT treatment. Digital tax reporting for casting agencies requires digital records that clearly distinguish between:

  • Principal versus agent transactions: When acting as an agent for talent fees, you charge VAT only on your commission; when acting as a principal (for example, buying services to sell to the client), VAT applies to the whole value. Software must map these flows correctly so the return shows the right output tax.
  • Recharges and disbursements: Genuine disbursements are outside the scope of VAT, whereas recharges are usually standard‑rated. Clear digital labels prevent misclassification.
  • Domestic and international services: Place‑of‑supply rules often mean no UK VAT on services supplied to overseas businesses. Retain evidence of the client’s location and VAT status.
  • Multiple VAT rates: Some cast‑related expenses (e.g., zero‑rated props or books) attract a different VAT rate. Use software codes to capture these accurately.

Quarterly VAT returns will only be accurate if you maintain digital records for each job—from the initial casting brief to the final payment— and reconcile them regularly. Good software also helps you monitor the VAT registration threshold; the current threshold is £90000 taxable turnover in any 12-month period.

Steps to Prepare for Digital Tax Reporting for Casting Agencies 

  1. Choose the right software: Select an HMRC-approved package that handles VAT codes for commissions, disbursements, and cross-border supplies. Cloud‑based systems such as Xero or QuickBooks integrate with expense apps and bank feeds, reducing manual entry.
  2. Set up an Agent Services Account (ASA): This account lets you authorise accountants to act digitally on your behalf. Connect your VAT number to your software through the ASA.
  3. Create digital links: Avoid copy‑and‑paste between systems. Spreadsheets are still allowed, but only if you use bridging software to create a digital link to HMRC.
  4. Review your processes: Map out where you act as agent versus principal on each casting job. Create separate codes in your ledger. Make sure to record talent payments, buy-through costs, and travel recharges using the appropriate VAT rate.
  5. Train your team:Everyone who raises invoices, books expenses or approves VAT returns should understand digital recordkeeping requirements and deadlines.
  6. Monitor thresholds and deadlines: Check turnover monthly so you register for VAT when you cross the £90 000 threshold. Set internal cut‑offs for expense submissions and invoice processing so you meet the one‑month‑plus‑seven‑day filing deadline.

Penalties and risks

Under the new penalty regime, late VAT returns accrue penalty points. Once you reach a points threshold, HMRC imposes a £200 fine. Points expire after a period of compliance, but repeated delays will keep you on the radar. Late payments trigger extra charges: nothing if paid or a Time‑to‑Pay plan is agreed within 15 days; 2% of the VAT owed for payments 16–30 days late; 4% for anything later. Interest is also charged on overdue amounts. Failing to use MTD‑compatible software can lead to compliance checks and fines.

Case Study — MTD for a Casting Agency

Client

A London casting agency handles talent fees, wardrobe, travel, and both commission and flat-fee services. Records were in spreadsheets and paper folders.

Challenges

  • Turnover near the £90k VAT threshold, risk of late registration.
  • Manual Word invoices and spreadsheets with errors and missing receipts.
  • Confused VAT coding — agent for talent, principal for wardrobe.

Our Solution

  • Registered for VAT and set up Xero with tailored VAT codes.
  • Linked bank feeds, receipt apps, and bridging for schedules.
  • Mapped flows for commission, buy-through, and disbursements.
  • Trained staff, set deadlines, and built a turnover dashboard.

Results

  • On-time digital VAT returns with no penalties.
  • Clearer job profitability and separation of commission vs costs.
  • Smooth MTD VAT compliance and readiness for MTD Income Tax 2026.

Why Choose Apex Accountants MTD Services for Casting Agencies? 

Apex Accountants specialises in the creative sector. We understand the nuances of casting work – from agency versus principal roles to cross-border productions. We help you choose the right software, set up digital records, and configure VAT codes that reflect your business model. Our support includes:

  • Reviewing your turnover to ensure timely VAT registration.
  • Implementing MTD‑compatible software with digital links across all systems.
  • Mapping your revenue streams so that VAT is treated correctly.
  • Training your team and reviewing returns before submission.
  • Advising on MTD for Income Tax as it rolls out from 2026.

Digital tax reporting is a permanent fixture. The casting agencies that adapt not only meet HMRC rules but also gain clear financial insight. Contact Apex Accountants today and prepare your agency to thrive in 2026 and beyond with expert-led MTD services for casting agencies.

New Changes to Making Tax Digital for Income Tax in 2026

Posted on by Sidra

Starting from April 2026, HMRC is rolling out its Making Tax Digital for Income Tax rules, a significant change affecting sole traders, landlords, and businesses across the UK. MTD aims to simplify tax reporting and reduce errors, but it will require some preparation. As experts in tax services, Apex Accountants is here to guide you through this transition and ensure compliance.

What is MTD for Income Tax?

Making Tax Digital for Income Tax is a major shift in how taxpayers report income and expenses to HMRC. Instead of submitting an annual Self-Assessment tax return, individuals and businesses will need to keep digital records and send regular updates to HMRC. This shift aims to improve accuracy, reduce errors, and make tax reporting more streamlined.

Who Will Be Affected by New Changes to Making Tax Digital (HMRC)?

Not everyone will be required to comply with MTD for Income Tax immediately. HMRC is phasing in these changes based on income thresholds:

  • April 2026: If your combined gross income from self-employment and property exceeds £50,000 per year, you must comply.
  • April 2027: The threshold drops to £30,000.
  • April 2028: The threshold will drop again to £20,000.

It’s important to note that the thresholds are based on gross income—before any expenses or tax reliefs are deducted.

What Will Change?

With MTD, the way you report your income and expenses will change. Instead of filing a single tax return once a year, you’ll need to send regular quarterly updates to HMRC. These updates provide a snapshot of your finances, which helps HMRC track your tax position more accurately throughout the year.

  • Quarterly Updates: You will send a digital summary of your income and expenses every quarter.
  • Final Declaration: After the year ends, you will still file an annual declaration to make final adjustments for allowances and reliefs.

Key Requirements:

  • You must use MTD-compatible software to record your income and expenses. Popular options include Xero, QuickBooks, and RentalBux.
  • You can still use spreadsheets, but they must be linked to HMRC with “bridging software.”

Penalties and Compliance

HMRC will introduce a new penalty system, replacing fixed fines with a penalty point system. Each missed quarterly update will result in a penalty point, and after accumulating a certain number of points, you’ll face a financial penalty.

  • Late Filing Penalties: If you miss a deadline, you’ll accumulate penalty points.
  • Late Payment Charges: These charges are proportionate, meaning if you pay late, the penalty depends on how overdue your payment is.

Exemptions to MTD

While MTD will affect many taxpayers, there are exemptions:

  • People with disabilities or old age may be granted exemptions if they cannot use digital tools.
  • Geographic limitations such as poor internet connectivity could also qualify individuals for exemption.
  • Trustees and some religious organisations will not need to comply.

How Apex Accountants Can Help You Navigate The Changes To Making Tax Digital For Income Tax

At Apex Accountants, we specialise in helping businesses and individuals navigate the complexities and changes to Making Tax Digital (HMRC). Here’s how we can support you:

  • Software Setup & Integration: We can help you choose and set up MTD-compatible software tailored to your needs.
  • Tax Planning & Advice: Our team offers tax planning strategies to ensure you’re well-prepared for quarterly reporting and that you maximise allowable tax relief.
  • Ongoing Support: We provide regular check-ins and expert advice to make sure you’re staying compliant with MTD rules, especially as income thresholds change.
  • Penalty Prevention: We’ll assist you in managing deadlines and avoiding penalties with timely quarterly updates and final declarations.

How to Prepare for Changes To MTD in 2026?

If you’re affected by the upcoming changes, here’s what you can do to get ready:

  • Check your income: Ensure that you are aware of your income level, especially if you’re close to the £50,000 threshold.
  • Choose software: Find MTD-compliant accounting software that works for your business or personal tax situation.
  • Consider voluntary registration: Even if you’re not yet required to comply, voluntary registration can help you get comfortable with MTD early.
  • Consult with a tax professional: Speak to Apex Accountants about the best software options, tax relief strategies, and compliance tips.

By partnering with Apex Accountants, you can ensure a smooth transition into the digital tax reporting system and take advantage of expert support every step of the way. Contact Apex Accountants today to prepare for the HMRC MTD changes in 2026!

1. What is the deadline for MTD for Income Tax?

The full roll-out begins in April 2026 for those with income above £50,000. The threshold gradually lowers over the coming years.

2. Will I be penalised if I miss a quarterly report?

Yes, you’ll accumulate penalty points for missed deadlines, which can result in financial penalties if not corrected.

3. What software is compatible with MTD?

HMRC-approved software includes Xero, QuickBooks, and RentalBux. Spreadsheets can be used but require bridging software.

4. What is Making Tax Digital for Self-Assessment?

Making Tax Digital (MTD) for Self-Assessment will require self-employed individuals and landlords to submit quarterly updates to HMRC instead of filing one annual tax return. This digital reporting aims to simplify the process and improve accuracy.

5. When Does MTD for Self-Assessment Start?

MTD for Self-Assessment begins in April 2026 for individuals with a combined gross income from self-employment and property above £50,000. The threshold will gradually decrease in the following years.

6. What is the New Digital Tax?

The new digital tax is part of HMRC’s initiative to move away from paper records and self-assessments. It introduces quarterly digital submissions and requires taxpayers to maintain digital records, using HMRC-approved software.

7. What is Making Tax Digital for Limited Companies?

Making Tax Digital for Limited Companies involves extending MTD to corporate tax filings. Limited companies will be required to use compatible software for submitting quarterly updates and annual tax returns. However, this may be phased in gradually, starting with larger businesses.

8. What is Making Tax Digital for Partnerships?

Making Tax Digital for Partnerships will apply similar rules as for self-employed individuals, requiring partnerships to maintain digital records and submit quarterly updates to HMRC. This change is expected to come after the initial roll-out for sole traders and landlords.

9. What is Making Tax Digital Qualifying Income?

Making Tax Digital Qualifying Income refers to income from self-employment or property that exceeds the income threshold set by HMRC for MTD. In 2026, this threshold starts at £50,000. The qualifying income is what determines whether a taxpayer must comply with MTD rules.

10. Who is Exempt from Making Tax Digital?

Certain individuals may be exempt from MTD if they are unable to use digital tools due to age, disability, or living in areas with poor internet access. Additionally, some trusts, charities, and religious organisations may be exempt.

11. Is Making Tax Digital Going to Happen?

Yes, Making Tax Digital (MTD) is already being rolled out in phases. The government is committed to bringing the tax system fully into the digital age, with MTD for Income Tax set to start in April 2026 for those with qualifying income above £50,000.

Practical Guide to Making Tax Digital for Agricultural Cooperatives

Posted on by Sidra

Agriculture in the UK relies heavily on cooperatives. These organisations allow farmers to pool resources, share storage, access machinery, and sell products collectively. By working together, members reduce costs and strengthen profitability. However, this collective model brings unique tax and compliance challenges, especially when dealing with VAT. At Apex Accountants, we have extensive experience working with farming groups and agricultural cooperatives. Our role is to guide these organisations through complex tax rules, ensuring compliance with the HMRC while protecting financial stability. We understand the practical pressures co-ops face and provide solutions tailored to their structure. This article explains what Making Tax Digital for agricultural cooperatives means in practice. It highlights the compliance challenges they encounter, sector-specific risks, and how Apex Accountants delivers targeted support to keep farming groups compliant and financially secure.

What MTD means for cooperatives

MTD requires VAT records to be stored digitally and submitted using compliant software. Agricultural cooperatives are often affected because their income streams—ranging from member fees to product sales—must be categorised correctly for VAT. Many co-ops now rely on MTD software for farming groups to manage these obligations effectively. Even when income falls below the threshold, MTD obligations remain unless the cooperative deregisters from VAT.

Sector-specific compliance challenges

  1. Grain storage co-ops – Silo rental fees charged to members must be recorded separately in digital systems. Incorrect treatment risks underpaid VAT.
  2. Dairy co-ops – Milk sales are taxable, while member training courses are exempt. Errors in classification can trigger HMRC penalties.
  3. Machinery rings – Shared tractor or baler hire involves complex input VAT claims. Poor tracking may lead to disallowed recovery.

Key risks for cooperatives

  • Partial exemption errors – Misapplied calculations could mean losing VAT recovery on significant shared machinery costs.
  • Outdated software – Traditional farm bookkeeping tools often lack MTD software for farming groups, leading to compliance gaps and extra admin work.
  • Complex member transactions – Misunderstanding whether member services are taxable or exempt invites HMRC scrutiny.

How Apex Accountants Supports Making Tax Digital for Agricultural Cooperatives

  • System configuration – Our trusted tax advisors for agricultural cooperatives configure digital systems that manage pooled input costs across members and allocate VAT correctly.
  • Transaction mapping – Our team separates taxable sales (milk, crops) from exempt services (training, advisory sessions).
  • Partial exemption expertise – We apply accurate calculations, safeguarding VAT recovery on mixed activities.
  • AFRS support – We train administrators to manage digital workflows for Agricultural Flat Rate Scheme (AFRS) compensation payments.
  • Tailored training – Co-op staff learn how to record silo rentals, machinery use, and pooled marketing costs directly in MTD-compliant software.

Why co-ops choose Apex Accountants

Compliance failures can reduce margins and lead to penalties. At Apex Accountants, our trusted tax advisors for agricultural cooperatives deliver tailored solutions that safeguard financial stability and maintain full HMRC compliance. With our guidance, cooperatives can focus on supporting their members while staying fully MTD-compliant.

Contact Apex Accountants today to discuss MTD compliance support tailored to your cooperative’s needs.

Expert Guide on MTD for Construction SMEs in the UK

Posted on by Sidra

Making Tax Digital for Income Tax Self-Assessment (MTD ITSA) is transforming how sole traders and landlords report their income. HM Revenue & Customs (HMRC) now requires digital recordkeeping and quarterly updates through approved software. MTD for construction SMEs is particularly important, as firms in this sector often manage complex projects, multiple subcontractors and a high volume of transactions. By moving to a digital accounting platform early, construction businesses can simplify compliance while gaining clearer visibility of profitability and cash flow.

Who must follow MTD for Income Tax

Sole traders and landlords must use the MTD ITSA service if they are registered for self-assessment, their business or property income exceeds a threshold and they keep records digitally. HMRC determines whether you must comply by looking at your qualifying income — the gross turnover from self‑employment plus receipts from property before deducting expenses. Partnerships and limited liability partnerships will join later.

Making Tax Digital ITSA Deadlines

The roll-out of MTD for Income Tax Self-Assessment is phased. Your starting date depends on your qualifying income:

  • If your qualifying income is over £50,000 in the 2024-25 tax year, you must comply from 6 April 2026.
  • If your qualifying income is over £30,000 in the 2025-26 tax year, you must comply from 6 April 2027.
  • The government also plans to legislate to lower the threshold further. Those with income over £20,000 are expected to be brought into MTD. While initial guidance referred to 2026-27, a technical note issued in March 2025 suggested this expansion could instead take effect from April 2028.

If you fall within these categories, HMRC will write to you after reviewing your latest Self Assessment return and confirm when you must start using MTD ITSA service. However, it is your responsibility to check whether you need to sign up and ensure you have software in place.

What MTD means for construction firms

  • Quarterly updates instead of annual returns. Businesses must send a summary of income and expenses to HMRC every three months through approved software. At year-end, you will finalise your figures and submit a “Final Declaration” digitally.
  • Digital record‑keeping. Paper records and most manual spreadsheets will no longer be accepted. You will need software or bridging tools that can record each transaction and categorise income and costs correctly.
  • Compatible software. HMRC maintains a list of MTD‑compatible packages. These include cloud‑based accounting systems that integrate bank feeds, invoicing, expense capture and CIS calculations. Cheap bridging tools exist to convert spreadsheets into digital submissions, but using full cloud software will provide better control for complex construction projects.

Why construction SMEs should act now

Avoid last‑minute disruption

MTD ITSA starts in April 2026 for higher‑earning sole traders and landlords and will extend to those earning over £30,000 a year later. Construction companies often have high turnover and cash flow peaks, so many directors will fall within the first two phases. Waiting until the eve of the mandate could leave you scrambling to transfer paper records or outdated software into a compliant system. Early adoption allows you to iron out issues and train staff.

Improve accuracy and business insight

Cloud accounting tools automatically import bank transactions and allow you to create invoices and record subcontractor payments in real time. This helps reduce human error and ensures you capture all costs. With digital records you can monitor each project’s profitability and cash flow. Accurate quarterly updates reduce the risk of HMRC penalties and make year‑end closing smoother.

Streamline VAT and CIS compliance

Many construction firms already use MTD for VAT. Cloud accounting software can handle both VAT and the Construction Industry Scheme (CIS), automatically calculating deductions for subcontractors and generating monthly CIS returns. Combining VAT, CIS, and MTD ITSA in one system minimises duplication and ensures consistency.

Unlock collaboration with your accountant

Using the cloud means your accountant can access your books in real time, correct mistakes and provide timely advice. When it is time to submit quarterly updates, your accountant can check the data and manage the submission on your behalf. It also makes it easier to prepare management accounts and budgets.

Steps to prepare for MTD for Construction SMEs

  1. Review your income levels. Estimate your qualifying income for the tax years 2024‑25 and 2025‑26. If your turnover exceeds £50,000 or £30,000, respectively, plan for MTD from April 2026 or April 2027.
  2. Choose suitable software. Research cloud accounting packages that offer MTD-compatible submissions and features suitable for construction, such as job cost modules, CIS, and retention tracking. Avoid low‑cost bridging tools unless your transactions are simple.
  3. Digitise your records. Start keeping receipts, invoices and bank transactions in a digital format. Use smartphone apps to capture receipts on site. Please ensure each payment to subcontractors and suppliers is recorded promptly.
  4. Set up bank feeds. Link your business bank accounts to your accounting software to automate transaction entry and reconciliation. This saves time and improves accuracy.
  5. Train your team. Ensure finance staff and project managers understand the new processes. Run parallel records to test the system and make corrections before going live.
  6. Seek professional help. Work with an accountant experienced in the construction sector. At Apex Accountants, we help clients assess their readiness, choose software, and migrate data smoothly.

The future of MTD

Government policy continues to evolve. The Spring Statement 2025 signalled an intention to bring taxpayers with income over £20,000 into MTD from April 2028. Digitalisation may eventually apply to all self-assessment customers. Partnerships and limited companies are likely to be mandated later, but no dates have been announced. Keeping up with current trends will facilitate the management of future changes.

How Apex Accountants’ MTD Services for Construction Management Firms Help

At Apex Accountants, we guide construction companies through every step of MTD preparation:

  • Software setup – Selecting and implementing HMRC‑approved cloud systems.
  • Digital record‑keeping – Training teams to capture invoices and receipts correctly.
  • Quarterly submissions – Managing ongoing MTD reports to HMRC.
  • Tax planning – Linking digital records to wider strategies for cash flow and profitability.
  • Sector expertise – Tailored advice for construction projects, subcontractor management and compliance with CIS.

Final thoughts

Making Tax Digital for Income Tax is a significant shift for construction SMEs, but it also represents an opportunity. By embracing digital record‑keeping and cloud accounting now, you reduce the risk of non‑compliance and acquire invaluable knowledge about your business. As the deadlines approach, talk to Apex Accountants about planning your MTD journey. Our MTD services for construction management firms ensure your business remains compliant, efficient and profitable in the digital tax era.

Making Tax Digital for Construction: Are You Prepared?

Posted on by Waheed Ahmed

Making Tax Digital for construction is transforming how the sector manages tax compliance. With complex VAT rules, CIS submissions, and subcontractor records, firms face greater pressure under HMRC’s digital regime. This article explains what MTD means for contractors and subcontractors, the penalties for non-compliance, and the software requirements for staying compliant. At Apex Accountants, we provide construction businesses with MTD-ready systems that cut errors, prevent fines, and improve long-term financial control.

What Making Tax Digital for Construction Means for Firms

MTD requires all businesses to keep digital records and file returns using HMRC-approved software. VAT-registered firms must already comply. From April 2026, MTD for Income Tax Self Assessment (ITSA) applies to sole traders and landlords earning over £50,000. By April 2027, it extends to those above £30,000. Thousands of subcontractors working under the Construction Industry Scheme (CIS) will be directly affected.

Manual records will no longer be acceptable. Paper submissions will be rejected. HMRC can issue penalties of up to £400 per return for failing to submit digitally, followed by daily penalties of £20 if errors continue. For many, preparing early is the only way to achieve smooth MTD compliance for construction companies.

Businesses must use MTD-compatible software such as Xero, QuickBooks, or Sage. These tools create digital links between invoices, CIS payments, VAT returns, and R&D records. HMRC prohibits copy-and-paste methods; data must flow digitally between systems to remain compliant. Choosing the right MTD software for construction companies can reduce errors, support CIS and VAT rules, and save valuable admin time.

Common Challenges in Construction

Construction firms often rely on spreadsheets, paper receipts, or multiple systems. This creates errors and invites HMRC scrutiny. For example:

  • CIS payments may be logged incorrectly if not captured digitally.
  • VAT domestic reverse charge rules increase the risk of inaccurate entries.
  • R&D costs can be missed, leading to smaller claims.

Even one missing £20,000 subcontractor invoice could reduce a company’s tax relief by £5,400. HMRC reports that 30% of small businesses are still not ready for MTD, showing how widespread these challenges remain. Reliable MTD software for construction companies helps reduce these risks and builds a stronger compliance process.

Why Preparation Matters

Delays can result in penalties, disrupt cash flow, and trigger HMRC investigations. Subcontractors under CIS must prepare now for ITSA reporting with full digital records. Early adoption of digital systems strengthens compliance and creates lasting value. Firms that focus on proper MTD compliance for construction companies also benefit from faster R&D claims, better cash flow forecasting, and reduced administration costs.

How Apex Accountants Supports You

MTD has become a legal requirement for construction firms, and failing to comply can result in rejected submissions, daily fines, and loss of tax relief. Apex Accountants specialises in digital compliance for the construction sector, combining industry knowledge with MTD expertise.

We set up MTD-compatible software, manage CIS reconciliation, and handle VAT compliance under Domestic Reverse Charge rules. Our team also tracks R&D costs, prepares capital allowance registers, and ensures subcontractors are ready for ITSA reporting.

Beyond compliance, we deliver measurable benefits: faster R&D claims, stronger cash flow forecasting, and reduced administration costs. Partner with Apex Accountants to make your construction business MTD-ready and financially future-proof.

MTD for Vehicle Leasing and Financing Businesses

Posted on by Waheed Ahmed

MTD for vehicle leasing and financing businesses reshapes how firms manage VAT. HMRC requires businesses to keep digital records and submit VAT returns through compatible software. For firms handling lease agreements, hire purchase (HP) contracts, and complex finance structures, MTD means adopting systems that capture every detail from residual values to balloon payments. Apex Accountants specialises in supporting vehicle leasing and financing providers, helping them stay compliant, improve reporting accuracy, and reclaim VAT where possible. This article explains what MTD means for the sector, highlights common challenges with VAT treatment, and shows how Apex Accountants delivers specialist tax advice for vehicle finance businesses.

Understanding MTD for Vehicle Leasing and Financing Businesses

MTD for VAT applies to VAT-registered companies with turnover above £90,000. From April 2026, it will also extend to income tax self-assessment for landlords and sole traders. In the leasing and financing sector, MTD requires:

  • Recording digital data on lease rentals, HP interest charges, residual value guarantees, and balloon payments.
  • Submitting VAT returns through software linked to fleet and finance systems.
  • Maintaining real-time records that reflect ongoing contract changes.

The sector’s VAT rules remain complex. VAT applies to monthly lease rentals, while exempt finance interest and optional add-ons such as GAP insurance or maintenance packages create further challenges. Integrated digital systems allow firms to separate taxable and exempt elements correctly and maintain a clear audit trail.

Challenges in the Sector

Leasing and finance businesses face specific VAT risks that generic systems rarely capture. Common challenges include:

  • Applying VAT correctly on maintenance packages and service elements tied to lease agreements.
  • Treating GAP insurance and finance charges as exempt while reporting taxable rentals.
  • Managing partial exemption rules where both taxable supplies (rentals) and exempt supplies (finance interest) occur.
  • Dealing with blocked input VAT on certain cars leased to employees.
  • Handling resale VAT through the margin scheme when ex-fleet vehicles are sold.

These issues show why VAT compliance for vehicle leasing companies requires specialist knowledge, as even small errors can trigger penalties or missed recovery opportunities.

Why Work with Apex Accountants

Apex Accountants partners with vehicle leasing and financing providers to deliver digital systems built around sector requirements. Our services cover:

  • Software setup and integration – connecting MTD platforms with fleet management and finance systems.
  • VAT compliance reviews – applying correct treatment to rentals, maintenance packages, insurance, and resale VAT.
  • Digital record solutions – linking bank feeds, invoicing, and contract data into a single MTD-compliant platform.
  • Ongoing sector support – monitoring VAT deadlines and managing HMRC challenges on your behalf.

Beyond compliance, we help businesses take control of complex areas such as reclaiming VAT on leased cars, applying capital allowances across fleets, and managing residual value guarantees. VAT compliance for vehicle leasing companies demands specialist knowledge, and Apex Accountants deliver it with precision.

By embedding digital processes into leasing and finance operations, we give firms both compliance and financial clarity. With our sector expertise, companies avoid costly VAT mistakes, protect cash flow, and maintain a strong position with HMRC. Our team also provides tailored tax advice for vehicle finance businesses, ensuring every contract detail is reported correctly and every opportunity for relief is secured.

If your leasing or finance business needs clarity and confidence with Making Tax Digital, contact Apex Accountants today, the partner trusted to keep you compliant and financially secure.

Why You Should Transition To Making Tax Digital (MTD) 

Posted on by Mohsin Khan

Making Tax Digital (MTD) is all about using digital tools to manage and file taxes. It helps reduce errors and makes tax easier. With MTD, businesses and individuals will keep records online and send them directly to HMRC. No more paperwork!

Since April 2019, VAT-registered businesses earning over £85,000 must use MTD. By April 2022, all VAT-registered businesses joined in. In 2026, self-employed individuals and landlords earning over £50,000 must follow MTD. The rules apply to those earning £30,000 and up in 2027.

MTD brings many benefits. It makes tax processes quicker and smarter. Automation reduces mistakes. Real-time updates help with planning and decision-making. Plus, MTD works with your existing tools, saving time.

To comply, businesses must keep digital records and submit updates to HMRC. From VAT-registered businesses to self-employed individuals, everyone needs MTD-compatible software. It’s a step-by-step change, but don’t worry! Apex Accountants is here to help you make the switch smoothly.

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