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Making Tax Digital for VAT

MTD is applicable to your VAT returns commencing on or after 1 April 2019 if your VATable turnover is over £85,000 per annum.


You must keep your accounting records digitally and submit your VAT returns using MTD compatible software. You will not be able to submit VAT returns by typing the numbers into the gov.uk website once in MTD for VAT.

If your digital accounting records and the MTD compatible software are separate pieces of software, you must have them digitally linked by 1 April 2020. If you use several different software packages for your accounting transactions, they will also need to be digitally linked by 1 April 2020.

Re-keying numbers between software or cutting and pasting information between different accounting software packages that make up your accounting record is not allowed under MTD from 1 April 2020.

Check out our FAQ’s

A very limited number of business will qualify for a 6 month deferral.

Sign up for Making Tax Digital via the gov.uk website.

Once you’ve signed up, you’ll receive an email within 72 hours to confirm that you can submit returns using software that’s compatible with Making Tax Digital for VAT.

After you’ve signed up, you cannot use VAT online services to send VAT Returns.

Signing up for your MTD for VAT account – After 1 April 2019.

If you are caught by MTD you must use your gov.uk user ID and password to sign up. HMRC will provide you with another user ID and password only if you are an agent, for normal businesses we understand that you will continue to use your existing gov.uk user ID and password to submit your VAT returns electronically from your MTD compatible software. Even though this is the same login details, you will no longer sign into the government gateway to submit your VAT returns.

Using software to submit your returns electronically – gov.uk

HMRC- how to sign up for MTD

If you sign up early for MTD you will join the pilot scheme which is only available to a limited number of people using a limited selection of accounting software providers. The vast majority of our clients are choosing to wait until after 1 April 2019.

We therefore suggest that you submit any VAT returns for periods prior to those commencing on or after 1 April 2019 in your usual way before signing up to MTD. The process to sign up for MTD is in constant development and is still subject to change, even at this late stage.

Your gov.uk login details will then likely need to be input into your accounting software to enable it to make the MTD for VAT submissions.

If you already submit your VAT return from your software directly you may have to enable some options to switch this from the traditional gateway type of submission to the software MTD compliant submission, otherwise you return may be rejected.

MTD compatible software and bridging software

You will need to check with your accounting software supplier to ascertain if it is capable of making the digital VAT submissions.

HMRC have published a list of compliant software where you can check if your systems will be compliant with MTD.

If your accounting software is not capable of sending the VAT return directly to HMRC under MTD you will need to do one of the following:

  • Update your software (if possible to make it MTD compliant)
  • Change your accounting software to one that is MTD compliant
  • Extract your VAT return from your current software then use a piece of bridging software to submit your VAT return under MTD

We have looked at many pieces of bridging software and based on the limited testing we have been able to carry out in advance of MTD we intend to use Taxoptimiser where we cannot submit directly from accounting software. This is because this software is cloud based (you simply access it via your web browser), it is inexpensive, easy to use and requires no software installation, we envisage using excel and Taxoptimiser for group VAT submissions when they fall into MTD. You should conduct your own review of bridging software to see what is right for you.

Bridging software and excel can also be used to link group VAT returns together from multiple digital records.

HMRC publish a list of compliant software – Find software suppliers for sending VAT Returns and Income Tax updates

Accounting software – Sage 50 / Sage 50C / Sage 50 Cloud

Sage have updated and re-branded Sage 50 and Sage Instant as Sage 50 Cloud which comes with 3 variations. This does not mean you have to store your data in the cloud, but rather that the software now has some ‘cloud connected features’.

You will need to check with Sage that your version is capable of making MTD for VAT submissions and that you have the correct license with them to do so.

In general, Sage are moving all their customers to a subscription basis.

See if your account is compliant by visiting: Is my Sage 50 Accounts compliant with Making Tax Digital?

Cloud accounting software

Xero and QuickBooks Online are our preferred cloud accounting software providers. They are relatively inexpensive and both very easy to use. As they are subscription and accessed by a web browser they are always the latest ‘version’ and hence will be capable of making MTD submissions.

We not only provide discounted cloud software subscriptions but also advise in selecting the right package, conversion and training for you and your staff in these pieces of software.

Still unsure? Check our FAQ’s about MTD

Find out the benefits of cloud accounting here

Sign up for Making Tax Digital now via the gov.uk website.

Page updated as at 16 April 2019


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