Making Tax Digital for VAT applies to all VAT-registered businesses. You must keep digital VAT records and file returns from compatible software using digital links — typing figures into HMRC's website is no longer permitted.
Thresholds and start dates for Making Tax Digital have changed more than once. Check gov.uk for the dates that apply to you before planning around them.
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All VAT-registered businesses, regardless of turnover. The earlier threshold-based exemption was removed, so if you are registered, you are in scope.
A small number of exemptions exist on grounds such as digital exclusion, and they have to be applied for rather than assumed.
A digital link is an electronic transfer of data between pieces of software without manual intervention. Copy and paste is not a digital link, and neither is retyping a figure from one system into another.
This is the requirement that catches people using a spreadsheet plus a portal. The chain from record to submission has to be unbroken, which is why bridging software exists.
Late filing and late payment fall under a points-based penalty system: individual slips earn points, and a penalty follows once you reach a threshold. Points expire after a period of compliance.
The practical implication is that being repeatedly a few days late now costs money in a way it previously might not have.
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COMMON QUESTIONS
Yes. Annual accounting scheme users are still within MTD for VAT and must keep digital records and file from compatible software.
Yes, with bridging software that creates a digital link to HMRC, and provided the underlying records are digital. What you cannot do is manually retype summary figures into the HMRC website.
You are in scope from registration. Set the software up before your first return rather than after — the first return is the worst time to discover a missing digital link.
No. It is the record of each transaction — date, value, VAT rate — that must be digital, not the invoice behind it. You still have to keep the invoices, and scanning them is the sensible way to do that, but a paper file in a drawer is not a breach.
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