Who Must Follow MTD for VAT?
All VAT-registered businesses in the UK must follow MTD for VAT, regardless of their taxable turnover. The requirement has been in place since April 2019 for businesses above the VAT registration threshold, and was extended to all VAT-registered businesses from April 2022.
What MTD for VAT Requires
MTD for VAT requires you to: keep VAT records digitally in MTD-compatible software, maintain a digital audit trail from source records to VAT return figures, and submit VAT returns to HMRC directly through your MTD software — not by logging into the HMRC VAT portal.
MTD for VAT Penalties
HMRC applies a penalty points system to late VAT returns under MTD. Accumulating points can lead to a financial penalty. Non-digital record-keeping and manual VAT return submission outside of MTD can also attract penalties.
Already VAT-Registered but Not Using MTD Software?
If you are filing VAT returns through the old HMRC online portal rather than through compatible MTD software, you are not fully compliant with MTD for VAT. We can help you identify appropriate software and make the transition.