The requirement to keep digital records and make quarterly submissions will be statutory and therefore cannot be ignored. Just as you have to make VAT submissions or file a tax return now, you will have to comply with these new requirements.
As you would expect, there will be a penalty regime in place for those who do not meet their obligations under these rules.
A points based penalty system where financial penalties are only imposed on repeat offenders, was to be rolled out but this has been delayed until 2021 and so the current VAT penalty regime will apply.
HMRC have indicated that there will be a ‘soft landing’ period of one year, during which time no penalties will be imposed to allow people to adjust to their new filing obligations. However, it is expected that this will only apply
where the taxpayer is making a real effort to comply. Ignoring MTD is expected to lead to a penalty.
There is also going to be a new late payment penalty regime, which will be a tiered system with a smaller penalty if you pay between 15 and 30 days late and a larger penalty if you pay more than 30 days late.