Exemptions for Making Tax Digital (MTD) for VAT

Since 1 April 2019, all VAT-registered businesses with a taxable turnover above £85,000 in a rolling 12-month period have had to follow the new MTD for VAT rules. 

From 1 April 2022 all VAT-registered businesses, regardless of their turnover, must sign up for Making Tax Digital for VAT with HMRC and submit their VAT returns online through MTD-compliant software (like QuickBooks). They’re also required to keep digital business and tax records. 

It's not possible to opt out of MTD for VAT unless your business is located in a region which is not affected by MTD for VAT or you have obtained an exemption from HMRC for MTD for VAT.  

You may not need to register for Making Tax Digital for VAT or set it up in QuickBooks Online if your business is based in the Isle of Man, Jersey or Guernsey. Currently, there are no plans to roll out MTD for VAT in these locations.

According to HMRC, you can apply to be exempt from MTD for VAT if you’re unable to use a computer, software or the internet. This could be for a number of reasons, including age, disability, location or religious reasons. 

You're automatically exempt and do not need to apply for exemption if: 

• You’re already exempt from filing VAT Returns online 
• You or your business is subject to an insolvency procedure 

How do I apply for an exemption?

To apply for an exemption, you can call or write to HMRC. HMRC will consider each application on a case-by-case basis. Be sure to provide the following information:

• Your business name and address 
• Your business VAT registration number
• Why you believe you are exempt from MTD for VAT
• How you currently file your VAT Return 
• An authorisation letter from the business – if you’re applying on someone’s behalf 

You’ll receive a letter with HMRC’s decision. While you wait, you’ll need to continue filing VAT Returns the way you usually do.

To see a list of examples of businesses who are exempt, see HMRC’s exemptions from MTD for guidance.