VAT-registered businesses must use Making Tax Digital compatible software for their VAT returns from 1 November 2022
HM Revenue and Customs (HMRC) is reminding businesses that from Tuesday 1 November 2022, they will no longer be able to use their existing Value Added Tax (VAT) online account to submit VAT returns.
By law, all VAT-registered businesses must now sign up to Making Tax Digital (MTD) and use compatible software to keep their VAT records and file their returns.
From Tuesday 1 November 2022, businesses who file their VAT returns on a quarterly and monthly basis will no longer be able to submit them using their existing VAT online account, unless HMRC has agreed they are exempt from MTD.
If businesses do not file their VAT returns through MTD-compatible software, they may have to pay a penalty. Even if a business currently keeps digital records, they must check their software is MTD compatible and sign up for MTD before filing their next return.
How to sign up to Making Tax Digital
If a business hasn’t already signed up to MTD or started using compatible software, they must follow these steps now:
- Choose MTD-compatible software – a list of software, including free and low-cost options, can be found on GOV.UK
- Check the permissions in the software – once a business has allowed it to work with MTD, they can file VAT returns easily. See manage permissions for tax software.
- Keep digital records for current and future VAT returns – a business can find out what records need to be kept on GOV.UK
- Sign up for MTD and file future VAT returns using MTD-compatible software – to find out how to do this, see keeping VAT records
If a business is already exempt from filing VAT returns online or if their business is subject to an insolvency procedure, they will automatically be exempt.
A business can check if they can apply for an exemption from MTD if it is not reasonable or practical for them to use computers, software or the internet. HMRC will consider each application on a case-by-case basis.
If a business is new and is not yet registered for VAT, they will automatically be signed up for MTD while registering for VAT through HMRC’s new VAT Registration Service (VRS). Registering via this online service not only means a faster VAT registration and improved security, but also helps new businesses to be fully compliant with MTD requirements from day one – although they will still need to get the right software to submit their VAT returns.
Help with MTD for your business
A range of accessible help is available online from HMRC including webinars and videos as well as through HMRC’s Extra Support Service. Thousands of people have also benefitted from HMRC’s live webinars, which offer support on filing digitally and explain how it can help businesses. HMRC is continuing to communicate directly with businesses and agents to support them as they transition to MTD for VAT.