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Making Tax Digital for VAT requires VAT registered businesses with taxable turnover above the VAT registration threshold to keep records in digital form and file their VAT Returns using software.

It is increasingly common for business records and accounts to be kept digitally, in a software program on a computer or tablet, or in a smartphone application, or maintained through such a device and stored using a cloud-based application.

The difference under Making Tax Digital is that the software which businesses use must be capable of keeping and maintaining the records specified in the regulations, preparing their VAT Returns using the information maintained in those digital records and communicating with HMRC digitally through our Application Programming Interface (API) platform.

If your digital records are up to date, software will be able to collate and prepare your return for you. It will then show the return to you and ask you to declare that it is correct and confirm that you want to submit it to HMRC. Once you have submitted your return you will receive confirmation through your software that it has been received.

This notice provides further details of the Making Tax Digital rules.

‘Making Tax Digital’ (MTD) is a key part of the government’s plans to make it easier for individuals and businesses to get their tax right and keep on top of their affairs. HMRC’s ambition is to become one of the most digitally advanced tax administrations in the world – ‘Making Tax Digital’ is about fundamental changes to the way the tax system works and transforming tax administration so that it is more effective, efficient and easier for taxpayers to get their tax right!

‘MTD’ is a fundamental change to the administration of the UK tax system. It will affect how businesses, other organisations, agents and individuals maintain their accounting and tax records and how they transact and communicate with HMRC. ‘MTD’ transformation projects are being run by HMRC but should be seen as just one element of the digitalisation of business.

It is being said to be the biggest change to the administration of tax since the invention of PAYE some 50+ years ago.

The roll out was originally planned for 2018, but this deadline was extended by HRMC to the 1 April 2019.


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