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What is Making Tax Digital for VAT?
Making Tax Digital (MTD) is a government initiative to digitise the tax system.
Introduced in 2019, MTD was made compulsory for VAT-registered businesses in April 2022, as the first phase of Making Tax Digital. If you’re VAT-registered, you must:
Keep digital records using MTD-compatible software
Submit your VAT returns to HMRC using a digital link
This means that, if you have not already done so, you must move your financial records from a paper or spreadsheet system, to MTD-recognised software. You can then send your VAT returns to HMRC digitally.
HMRC now automatically signs up businesses for MTD if they’re registered for VAT.
Why is MTD for VAT important for businesses?
It’s important to comply with MTD rules if you are VAT-registered. Without MTD-compatible software, you won’t be able to submit VAT returns to HMRC and will face a penalty.
Under the new rules, businesses must keep and send digital records digitally to HMRC. These digital records will, in most cases, replace physical records entirely. This means that you won’t have to sort through reams of documents when filling out your VAT returns.
Benefits of Making Tax Digital
Submitting regular updates helps you see tax owed in real time
Modernising your records can help your business in the long run
Once set up, MTD can allow you to spend less time on admin
Be MTD for VAT confident with QuickBooks
Send your VAT returns straight to HMRC
QuickBooks and HMRC are linked so that you can send your VAT return directly–and securely–without having to use multiple systems.
Error check your VAT
The VAT error checker in QuickBooks scans your VAT for common mistakes. Spot duplicates, inconsistent VAT codes and missing transactions–all at the click of a button.
Always know what you owe
Assign default VAT rates to products and services and track your VAT in real time so you know how much you owe or can claim back. Receive email deadline reminders and be confident that you've saved enough to pay your bill.
Who needs to comply with Making Tax Digital for VAT?
Making Tax Digital for VAT is currently compulsory for all VAT-registered businesses. However, there are some exceptions. You won’t have to follow the MTD rules if:
Your business is run entirely by practising members of a religious society whose beliefs are incompatible with the regulation’s requirements (for instance, using computers is not allowed).
You are undergoing bankruptcy procedures.
You can’t easily use digital tools to keep your business records or submit your returns - for instance due to age, disability or remoteness of location.
Dates and deadlines for MTD for VAT
It’s important to follow the deadlines for MTD for VAT to avoid paying a penalty. Your VAT filing deadlines will remain the same as the previous VAT filing process and be either: monthly, quarterly or annually.
If you’re VAT-registered, you need to ensure you’re using MTD-compatible software. HMRC will contact you, and you’ll automatically be signed up for the scheme.
From April 2022, VAT-registered businesses must follow Making Tax Digital rules on their VAT return.
How to get started with Making Tax Digital for VAT
All VAT-registered businesses should now be signed up for Making Tax Digital for VAT. You no longer need to sign up yourself, and HMRC should have contacted you about it.
All businesses that earn over £90,000 have to register for VAT. You can register online through the government website, using your Government Gateway ID.
Read our helpful guide on how to register for VAT online here.
Choosing the right software for Making Tax Digital
Get ahead and start keeping tax records digitally with QuickBooks.
Support and guidance, including how to import your data, to ensure you’re fully compliant with Making Tax Digital.
Maintain accurate, up-to-date records of your income and expenses, ready to submit to HMRC annually or quarterly.
Our software is fully compliant with Making Tax Digital requirements, and can send data seamlessly to HMRC.
See the bigger financial picture of your business, with cutting-edge cash flow reporting and analysis tools.
Get expert help from real people
New to QuickBooks? Book a free 45-minute onboarding session with one of our experts. They'll walk you through setting up MTD for VAT in QuickBooks and answer your questions. Your welcome email has all the details.
Need help at any other time?
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Got a question about Making Tax Digital?
Frequently asked questions about Making Tax Digital for VAT
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