Category 2
MTD for VAT
VAT-registered businesses must keep digital VAT records and submit VAT Returns using compatible software.
What it is
Making Tax Digital for VAT requires VAT-registered businesses to keep digital records and submit VAT Returns using functional compatible software. It is separate from MTD for Income Tax but many businesses must follow both.
Who it applies to
All VAT-registered businesses must follow MTD for VAT rules, unless HMRC has granted a specific exemption. This includes companies, partnerships, and sole traders above the VAT registration threshold.
What you need to do
- Keep digital VAT records (sales and purchases).
- Submit VAT Returns through MTD-compatible software.
- Ensure records support the figures on each return.
Key points
- MTD for VAT applies even if your income tax is below MTD ITSA thresholds.
- Some businesses use the VAT Flat Rate Scheme — records must still be digital.