Making Tax Digital for VAT, explained simply

Making Tax Digital for VAT is HMRC's way of moving VAT into the digital age. Since April 2022 it applies to all VAT registered businesses, whatever their turnover. The idea is simple: keep your VAT records digitally and send your returns straight from software rather than typing numbers into the HMRC website by hand.

What it means for you

• You must keep your VAT records in a digital form, not on paper or scattered across notebooks.
• Your VAT returns must be sent using software that connects to HMRC, known as MTD compatible software.
• There must be a clear digital link between your records and your return, so figures are not copied across by hand.

How often do I report?

Most businesses send a VAT return every three months. The return summarises the VAT you have charged customers and the VAT you have paid on purchases, and the difference is what you pay to, or reclaim from, HMRC.

Staying compliant without the headache

The right cloud software makes MTD for VAT genuinely easy. It records your invoices and expenses as you go, works out the VAT automatically and files the return at the click of a button. Get the setup right once and it largely looks after itself.