MTD for VAT: Filing Requirements and Software
Making Tax Digital for VAT became mandatory in April 2022. Understanding the specific requirements and how to comply is essential for VAT-registered businesses.
**Who must comply?**
Most VAT-registered businesses must comply with MTD for VAT. However, businesses with turnover below £85,000 can apply for exemption. Additionally, businesses that are unable to comply due to exceptional circumstances can apply for relief.
**Digital records**
Under MTD for VAT, you must keep records digitally. This includes records of all sales and purchases, VAT charged and paid, and any adjustments. The records must be kept in a format that's compatible with HMRC's systems.
**Filing using software**
You must file your VAT return using MTD-compatible software. Your software must connect directly to HMRC's systems to submit the return electronically. Manual filing or spreadsheet submissions won't be accepted.
**The VAT return**
The VAT return must include the nine boxes as usual, but it's filed directly from the software to HMRC. The software calculates the VAT liability based on your records and files the return automatically.
**Keeping records**
You must keep records for at least six years. These records must be in a digital format and must be available for HMRC inspection. Many businesses use cloud-based accounting software, which makes it easy to keep records and provide access to HMRC if required.
**Penalties**
If you fail to comply with MTD for VAT, you can face penalties. These include penalties for late filing and penalties for inaccurate returns. It's important to ensure you're complying with the requirements.
**Support**
HMRC has published detailed guidance to help VAT-registered businesses make the switch to MTD. You'll find information on compatible software options and resources to support your transition. Most software providers offer training and ongoing technical support as well.
**Learn more:** For professional guidance on this topic, visit [Accounted For Ltd](https://accountedforltd.co.uk/mtd).
Learn more: For professional guidance on this topic, visit Accounted For Ltd