Making Tax Digital for VAT
Last updated: 16 May 2025
Making Tax Digital (MTD) became mandatory for VAT purposes for all VAT registered businesses, regardless of turnover, from April 2022 (previously it only applied to businesses with taxable turnover above the VAT threshold).
Under MTD for VAT businesses have to:
- keep digital records;
- use API enabled software (see below) to submit their VAT return to HMRC; and
- have digital links in place where more than one piece of software is used to carry out the above.
Please use the menu below to access the latest information on MTD for VAT.
The technical team are always interested in receiving feedback from members on MTD for VAT and hearing about their practical experiences. Please email your experiences to [email protected]
Contents
- Latest news
- Enrolling into MTD for VAT
- Exemption from MTD for VAT
- Agent Services Account (ASA) and Services for Agents
- Legislation
- Further information and guidance
Latest News
VAT portal closure on 1 November 2022
The online VAT filing portal closed on 1 November 2022. From that date, businesses can no longer use the VAT portal to file their returns unless HMRC have agreed that the business is exempt from MTD for VAT, or the business is waiting to hear back on an exemption application.
All other businesses need to file using compatible software, or apply for an exemption as soon as possible.
Enrolling into MTD for VAT
HMRC's VAT registration service automatically signs up newly registered taxpayers for MTD for VAT. HMRC have now also signed up all remaining VAT registered businesses to MTD, and there is therefore no longer any requirement to complete a separate sign-up step.
Exemption from MTD for VAT
Businesses do not have to follow the MTD for VAT rules if any of the following apply:
- It’s not reasonably practicable for them to use digital tools to keep their business records or submit VAT returns due to age, disability, remoteness of location or any other reason (often referred to as ‘digital exclusion’).
- They are subject to an insolvency procedure.
- The business is run entirely by practising members of a religious society or order whose beliefs are incompatible with using electronic communications or keeping electronic records.
Where any of the above apply the business has to apply to HMRC to claim an exemption.
Businesses that were previously exempt from online VAT return filing are automatically exempt from MTD, and do not need to apply to HMRC.
Further information on when exemption may be available and how to apply can be found in Section 3 of VAT Notice 700/22. If you are making claims for exemption on behalf of your clients, we would like to hear your experiences. Please email us at [email protected].
Agent Services Account (ASA) and Services for Agents
In order to access MTD services and to supply updates on behalf of clients, agents need an Agent Services Account (ASA). Each agency will have just one ASA per firm, and will be able to set up staff with administrator or assistant access to the account. Many firms may already have created an ASA in order to submit Trust Registration Service returns.
A basic outline of the ASA and how to set one up can be found here. Further information on the ASA can also be found in the HMRC guidance Making Tax Digital for VAT as an agent: step by step.
When you first set up your ASA account you will be given a new set of credentials. It is very important that you keep these safe, as HMRC have said they are unable to advise agents of the credentials they were given on set up. Instead, if an agent loses their ASA credentials they will have to contact the VAT helpline, who will delete their ASA account. They will then be required to set up a new ASA account from scratch.
Legislation
Enabling primary legislation for MTD for businesses for VAT is included in Sections 60 to 62 and Schedule 14 of Finance (No.2) Act 2017 which received Royal Assent on 16 November 2017. The explanatory notes to the original Bill can be found here.
The final MTD for VAT Regulations SI 2018/261 were laid before Parliament on 28 February 2018 and came into force on 1 April 2019.
VAT Notice 700/22: Making Tax Digital for VAT was published on 13 July 2018. This Notice sets out the detailed requirements of MTD for VAT, including record keeping and digital links.
Further information and guidance
HMRC’s most common MTD for VAT queries
This document summarises the most common of HMRC’s customer support issues for MTD for VAT and the associated HMRC guidance, including:
- Sign-up
- Accessing software
- Viewing data in the account
- Does MTD impact other services?
Businesses within MTD are required to use software to keep their records and submit returns to HMRC via their Application Programming Interface (API).
There are essentially three different types of MTD compliant software:
- Software packages that can be used to keep digital records and file returns via HMRC’s API.
- API enabled spreadsheets – spreadsheets with an inbuilt function allowing them to file returns via HMRC’s API.
- Bridging software which can take return information from an existing spreadsheet and submit this to HMRC via their API.
Where a spreadsheet is used, the relevant data must be digitally transmitted from the spreadsheet or other source where the digital records are kept, directly to HMRC. The summary information for completion of the VAT return must not be physically re-typed into another software package.
HMRC publish a list of MTD compatible software for VAT.
A new penalty and interest regime for VAT was introduced from 1 January 2023. You can find out more about the new regime in an article for AccountingWEB written by ATT Director of Public Policy, Emma Rawson.
Details of planned downtime and service issues for MTD for VAT can be found on the following pages:
Other information and guidance
HMRC's guidance on MTD for VAT can be accessed from its collection page.
HMRC have also produced a Making Tax Digital for Business – stakeholder communications pack which contains a variety of information for both Income Tax and VAT, including some frequently asked questions.