QuickBooks HelpQuickBooksHelpIntuit

Everything you need to know about Making Tax Digital (MTD) for VAT with QuickBooks Online

SOLVEDby QuickBooksQuickBooks Online514Updated 1 week ago

We'll cover everything from the latest Making Tax Digital changes and how it affects your business to step-by-step guides and frequently asked questions, so you can be MTD ready.

Jump to:

What is Making Tax Digital?

Making Tax Digital is HMRC’s initiative to transform the UK tax system and move it online. Think of it as switching from spreadsheets and paper records to a new digital system.

Since April 2021, VAT-registered businesses have had to keep digital records with the help of 'functional compatible software' that can connect directly to HMRC. This means HMRC will only accept VAT returns sent using MTD-compliant software, like QuickBooks Online.

Back to top

What's changing?

Initially, MTD rules only applied to businesses with a VAT taxable turnover above the £85,000 threshold. From April 2022, all VAT-registered businesses must use MTD-compliant software that can connect directly with HMRC. These are the current deadlines for MTD:

April 2021The option to submit VAT returns has been removed from the HMRC website.
April 2022MTD applies to all VAT-registered businesses. Businesses will need to use MTD-compliant software that can connect directly with HMRC to submit VAT returns.
November 2022The old VAT portal will close. VAT-registered business will no longer be able to file VAT returns via their online VAT account.
April 2024MTD for Income Tax applies to self-employed businesses and landlords with annual business or property income above £10,000.
April 2026MTD for Corporation Tax may come into effect for incorporated businesses and other organisations within the charge to Corporation Tax.

However, submitting VAT returns digitally doesn’t automatically make you MTD compliant. In this article, we’ll show you how to sign up to MTD before enabling it in QuickBooks.

Back to top

Am I affected by Making Tax Digital?

Starting from April 2022, all VAT-registered businesses must sign up for MTD, irrespective of whatever they earn.

Refer to HMRC's website to find out more about signing up for MTD.

Back to top

I submit my VAT returns online – am I not already compliant?

Just because you are submitting your VAT returns online doesn’t mean that you're MTD compliant. You will need to register for MTD for VAT on the government website and then set it up in QuickBooks Online and connect to HMRC.

Back to top

How do I sign up for MTD?

You should sign up for MTD at least one week before your filing deadline so that you are registered for the new service in good time to submit your return. After signing up you'll receive an email confirmation from HMRC containing your new MTD Government Gateway user ID and password within 72 hours. Then, you will need to turn on MTD and connect QuickBooks to HMRC – a process known as 'authorising' which we'll show you how to do.

Before you register

In order to avoid any problems, check the following before you sign up:

  • Make sure you're using the correct registration number and VAT scheme. You can check this in your Account and settings.
  • Check you have no pending or unsuccessful VAT returns (these will have amber or red status icons which you can find in Taxes).

What you'll need to register

  • Your business email address.
  • Your company Government Gateway user ID and password.
  • Your company VAT registration number and the latest VAT return.

Once you've registered

  • You will receive an email confirmation from HMRC within 48 to 72 hours containing your new MTD Government Gateway user ID and password.
  • Keep note of your new MTD Government Gateway user ID and password as you will need this to reauthorise QuickBooks every 18 months as part of the GDPR rules.
  • You'll no longer be able to access the old service and will need to file all your VAT returns from that point onwards using QuickBooks.

How do I submit a VAT return via MTD?

Here's a guided VAT submission checklist for small businesses to get started with MTD for VAT. If you're an accountant or bookkeeper, read this.

Back to top

Watch a webinar

If you need to see how it's done in detail we’ve filmed a helpful video for QuickBooks customers. This webinar shows you all the steps you need to take. From signing up on the HMRC website to submitting an MTD-compliant VAT return.

More help

For more help articles check out the Making Tax Digital hub. Or, post a question on our Community to start a discussion with an expert.

If you need to, you can find an MTD-ready advisor and get in touch with an expert using our network of certified accountants and bookkeepers near you.

Back to top

Frequently asked questions

Yes. QuickBooks Online is MTD compliant and recognised by HMRC. QuickBooks makes it easy to store digital records securely and file VAT returns directly with HMRC.

Keeping your records digitally for MTD means that you must store a digital copy of the transactions which make up the figures on your VAT return. QuickBooks Online automatically does this for you.

Yes! If you are on the Flat Rate Scheme (FRS), you can submit a MTD VAT return in QuickBooks Online. Before you do, make sure you switch on the MTD feature and authorise QuickBooks to interact with HMRC.

If you are an accountant or bookkeeper, read this.

QuickBooks Online is not compatible with Customs Declaration Software (CDS), and it's not possible to submit customs declarations through MTD. 

Yes, but not for the same period. For example, if you've successfully filed an MTD VAT return for the tax period from 1 to 31 January, 2021, then you can't file the VAT returns for the missed period before these dates.

If you wish to file the VAT return before that period, then you need to use QuickBooks trial edition to submit the missing period.

If the companies have the same VAT registration number, then you can combine the figures and submit the return via the bridging tool.

You can't file a return for two companies (that each have a VAT registration number) using the same VAT registration number.

*QuickBooks MTD software currently supports Standard, Cash and Flat Rate schemes. QuickBooks Bridging Software supports Standard and Cash schemes. Businesses whose home currency is not GBP are currently not supported for MTD.

Was this helpful?

You must sign in to vote, reply, or post
QuickBooks Online EssentialsQuickBooks Online PlusQuickBooks Online Simple Start

Sign in for the best experience

Ask questions, get answers, and join our large community of QuickBooks users.

More like this