MTD for VAT

Businesses whose taxable turnover currently exceeds the VAT registration threshold need to keep their records digitally, using MTD functional compatible software, and create the VAT return from that (or a combination of) software, see GOV.UK. 

All other VAT registered taxpayers must comply with MTD rules from VAT periods starting on or after 1 April 2022 (unless an exemption applies, see GOV.UK). The CIOT’s sign-up date range illustration for the different monthly and quarterly VAT return staggers is published here.

Latest News

See our Technical News section for the latest news on MTD for VAT.

Digital links

Taxpayers mandated for MTD for VAT must have the required digital links in place for VAT periods commencing on or after 1 April 2021, see GOV.UK (para 4.2.1).

Businesses with complex or legacy IT systems can apply for additional time to put the required digital links in place, subject to meeting certain qualifying criteria. This can include updating or replacing an IT system where the planned implementation date is later than the end of the soft landing period. If a business qualifies then the additional time will be granted as a specific direction. A copy of the application form can be found here.

MTD guidance and legislation

The main sources of guidance on MTD for VAT are VAT Notice 700/22, and on GOV.UK.

The supporting legislation for MTD for VAT is set out in section 62 of Finance (No. 2) Act 2017 and The Value Added Tax (Amendment) Regulations 2018. Some parts of the VAT Notice also have the force of law.

VAT agents

HMRC has specific guidance on MTD for VAT for agents on GOV.UK including the Agent Services Account and a step-by-step guide for VAT agents.

Software for MTD for VAT

HMRC has a searchable list of software developers that provide MTD for VAT compatible accounting or bridging software.