Making Tax Digital ― VAT

By Tolley

The following Value Added Tax guidance note by Tolley provides comprehensive and up to date tax information covering:

  • Making Tax Digital ― VAT
  • Pilot and timeline
  • Turnover test
  • Digitally exempt persons
  • Signing up for MTD
  • Keeping digital records
  • Digital records
  • Soft landing
  • VAT returns
  • Tax agents
  • Further reading

This guidance note provides an overview of the recent announcements made by HMRC with regard to submitting VAT returns and other information electronically.


This guidance note provides an overview of how to register for Making Tax Digital and submitting VAT returns using MTD-compatible software. HMRC has published VAT Notice 700/22  which provides details of the requirements and should be read by anyone preparing for the regime.

HMRC has also produce a Making Tax Digital for Business ― stakeholder communications pack  that is intended to support businesses making the transition to digital VAT record keeping and submission of VAT returns using MTD-compatible software from 2019.

Businesses that currently do not use software to complete their business records or use software that is not MTD-compatible (functional compatible) will need to take steps to ensure that they are VAT compliant with the new rules which came into effect on 1 April or October 2019. The rules also apply to agents who submit VAT returns on behalf of their clients as they will need to use MTD-compatible software.

Currently, the MTD provisions only apply to businesses with a turnover exceeding the VAT registration threshold (£85,000) and it only applies to the business’ VAT obligations. Businesses are required to use the MTD online provisions with effect from April or October 2019. Businesses that are trading below the VAT registration threshold are not required to file their returns using the MTD provisions; however, they can do so voluntarily if preferable. Businesses will also be able to voluntarily opt in for other taxes if they wish to benefit from what the government is calling a ‘streamlined digital experience’.

The scope of MTD will not be extended beyond VAT reporting obligations until April 2021 at the earliest as the government announced in the Spring Statement 2019 that it would not include any other taxes into MTD during 2020.

It is important to understand that businesses must sign up to MTD and that it is not an automatic process and that HMRC will not notify

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