What an MTD VAT Return Is
An MTD VAT return is a standard UK VAT return submitted through Making Tax Digital compatible software instead of through HMRC's old VAT online portal. The figures are the same nine boxes you have always reported — but the route to HMRC is now an API call from your software, with a digital audit trail behind it.
Software You Can Use to File a VAT Return
You have two routes to a compliant VAT return submission:
- Full bookkeeping software — products like Xero, QuickBooks, Sage, FreeAgent and similar HMRC-recognised packages keep your digital VAT records and file the return in one place.
- VAT bridging software — lightweight tools that take your VAT return figures from a spreadsheet and submit them to HMRC via the MTD API. Useful if you maintain VAT records in Excel or Google Sheets and do not want to move to a full accounting package.
Digital Records You Must Keep for VAT
HMRC requires VAT-registered businesses to keep VAT records digitally. That includes business name and address, VAT number, VAT scheme, the time of supply (tax point), the value of the supply (net), and the VAT rate charged. Records must be kept for at least six years.
Equally important is the digital links rule: data must flow between systems digitally — not by retyping or copy-paste — from source records through to the final VAT return figures.
How to Submit a VAT Return Using Software (Step by Step)
- Sign in to your MTD-compatible software.
- Make sure all sales and purchase invoices for the VAT period are entered.
- Run the VAT return inside the software to generate the nine boxes.
- Review the figures and check for missing or duplicated transactions.
- Authorise the software with HMRC (one-off "grant authority" step).
- Submit the return through the software — HMRC returns a confirmation receipt.
- Pay any VAT due by the deadline (1 month and 7 days after the period end).
VAT Return Deadlines and Payment
The standard VAT return and payment deadline is one calendar month and seven days after the end of the VAT period. MTD does not change this deadline — it only changes how the return reaches HMRC.
MTD VAT Penalties for Late Returns
HMRC operates a points-based late submission penalty system for VAT. You receive a penalty point for each late VAT return; once you reach the points threshold for your filing frequency, a £200 penalty applies and is repeated for each further late return. Late payment of VAT triggers separate interest and late payment penalties.