MTD for VAT Overview

Key facts

MTD for VAT became mandatory for businesses above the £85,000 threshold from 1 April 2019.
From 1 April 2022, MTD for VAT applies to all VAT-registered businesses, regardless of turnover.
You must keep digital records of your VAT transactions and submit VAT returns via MTD-compatible software.
All data transfers between software must use digital links — no manual re-keying or copy-and-paste.
You can no longer file VAT returns through the HMRC online portal if you are within MTD.

Overview of MTD for VAT

Making Tax Digital for VAT was the first phase of HMRC’s MTD programme and is now fully operational. Since 1 April 2022, all VAT-registered businesses in the UK must keep their VAT records digitally and submit their VAT returns using MTD-compatible software.^[1]

This applies whether your taxable turnover is above or below the VAT registration threshold (£90,000 from April 2024), and regardless of whether you registered voluntarily.

MTD for VAT Timeline

Date	Milestone
1 April 2019	MTD for VAT mandatory for businesses with taxable turnover above £85,000.^[1]
1 April 2020	“Soft-landing” period for digital links ends — all data transfers must be digital.
1 April 2022	MTD for VAT extended to all VAT-registered businesses, regardless of turnover.^[1]

What MTD for VAT Requires

Under MTD for VAT, you have three core obligations:^[2]

1. Keep Digital Records

You must maintain the following information digitally for each VAT return period:

Your business name, address, and VAT registration number
The VAT accounting scheme you use (standard, cash, flat rate, etc.)
The date, net value, and VAT rate for each supply you make (sales) and receive (purchases)
The total output VAT (VAT you charge) and input VAT (VAT you reclaim) for the period
Any adjustments (e.g. for bad debts, fuel scale charges, partial exemption)

2. Use Compatible Software

Your records must be maintained in, or connected to, software that is on HMRC’s list of compatible software. This software must be able to submit your VAT return to HMRC via the MTD APIs.^[3]

GoFile is an HMRC-recognised MTD-compatible software provider for VAT. Try it free.

3. Submit VAT Returns Digitally

Your VAT return must be submitted through your MTD software. You cannot use the HMRC online portal to file if you are within MTD for VAT. The return contains the same nine boxes as before — MTD does not change what you report, only how you report it.

Digital links: If you use multiple software packages or spreadsheets, all data transfers between them must be via digital links — no manual re-keying or copy-and-paste. See Digital Links & Digital Records for full details.

Who Must Comply?

MTD for VAT applies to:^[1]

All UK VAT-registered businesses, including sole traders, partnerships, limited companies, and other entities
Businesses registered voluntarily (below the threshold)
VAT groups and VAT divisions

Exemptions

A small number of exemptions exist:^[2]

Digitally excluded — those unable to use digital tools due to age, disability, remoteness, or religious reasons
Insolvency practitioners — in certain circumstances
Organisations not set up as businesses — some trusts, estates, and not-for-profit entities

If you believe you qualify for an exemption, you must apply to HMRC.

VAT Schemes and MTD

MTD for VAT works with all the standard VAT schemes:^[2]

Scheme	Compatible with MTD?	Notes
Standard VAT accounting	Yes	The default scheme — fully supported
Cash Accounting Scheme	Yes	Record VAT when payment is made/received
Flat Rate Scheme (FRS)	Yes	Digital records of gross income + flat rate percentage
Annual Accounting Scheme	Yes	One return per year, interim payments during the year
Partial Exemption	Yes	Additional record-keeping requirements apply

For more on VAT schemes, see Choosing a VAT Scheme in our VAT section.

Filing Your VAT Return Under MTD

The process for filing a VAT return under MTD is straightforward:

Step 1: Maintain your VAT records in MTD-compatible software throughout the period
Step 2: At the end of the VAT period, review the nine-box summary generated by your software
Step 3: Submit the return to HMRC through your software
Step 4: HMRC acknowledges receipt and confirms the amount payable or refundable

For a step-by-step walkthrough, see Filing VAT Returns via MTD.

Tip: If you are already VAT-registered and have been filing through the HMRC portal, you need to switch to MTD-compatible software. GoFile makes the transition easy — get started free.

Frequently Asked Questions

Do all VAT-registered businesses need to use MTD?

Yes. Since 1 April 2022, all VAT-registered businesses must keep digital records and file their VAT returns using MTD-compatible software, regardless of turnover. This includes businesses that registered for VAT voluntarily.

Can I still file my VAT return through the HMRC website?

No. If you are within MTD for VAT, you must submit your VAT return through compatible software. The HMRC online portal is no longer available for MTD-mandated businesses. A small number of exemptions exist for digitally excluded taxpayers.

What records do I need to keep digitally?

You must keep digital records of all your VAT transactions, including: your business name and address, VAT registration number, the VAT accounting scheme you use, the date, value, and VAT rate of every supply you make and receive, and the total output and input VAT for each return period.

What happens if I do not comply with MTD for VAT?

HMRC can charge penalties for failure to keep digital records or for filing VAT returns outside of MTD. The new points-based penalty system applies, with escalating consequences for repeated non-compliance.

Sources

Making Tax Digital for VAT — GOV.UK
VAT Notice 700/22: Making Tax Digital for VAT — HMRC
Find software compatible with Making Tax Digital for VAT — GOV.UK
Overview of Making Tax Digital — GOV.UK