2 min read
What MTD for VAT requires
Three things: keep your VAT records digitally, use HMRC-recognised compatible software, and submit returns through that software's API rather than typing figures into HMRC's website. It now applies to all VAT-registered businesses, whatever their turnover.
The digital-links rule
The part businesses trip over is "digital links". Data must flow between systems without manual re-typing — so copying a figure from a spreadsheet into your return by hand breaks the rules. Bridging software or an integrated package maintains the digital link from record to return.
Choosing software
Options range from full cloud accounting packages to lightweight bridging tools that connect a compliant spreadsheet to HMRC. The right choice depends on your size and complexity. Whatever you pick, keeping records current is what makes it painless — and gives you management accounts almost for free.
The upside beyond compliance
Because MTD forces current digital records, it hands you real-time visibility of VAT owed, cash position and margins. Businesses that embrace it find forecasting easier and their VAT returns faster and more accurate.
Getting the systems right
If moving to compliant software means investing in a new package, that is a business cost with a genuine return.
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See MTD for corporation tax for what is coming next.Frequently asked questions
Does MTD for VAT apply to my business?
If you are VAT-registered, yes — MTD for VAT now applies to all VAT-registered businesses regardless of turnover. You must keep digital records and file through compatible software.
Can I still use a spreadsheet for VAT?
Yes, provided it connects to HMRC through bridging software and the data flows via digital links rather than manual re-keying. A compliant spreadsheet plus bridging tool meets the rules.
What is a digital link?
An electronic transfer of data between software programs with no manual intervention — no copying and pasting figures by hand. Your records and your return must be connected digitally end to end.
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