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 and submit their VAT returns using '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.
Am I affected by Making Tax Digital?
As of April 2022, all businesses that are registered for VAT must be compliant with MTD, regardless of their annual turnover. This means that if you're VAT-registered, you need to start using MTD-compatible software to keep your records and submit your VAT returns. When you register your business for VAT, you are automatically signed up for MTD for VAT.
Do I need to sign up for MTD for VAT?
As a VAT registered business, you may be wondering if you need to sign up for Making Tax Digital for VAT. The short answer is no–all businesses should be automatically signed up for MTD for VAT by HMRC, unless they are exempt or have applied for exemption.