HMRC reminds businesses to prepare for MTD for VAT

Making Tax Digital

Businesses should take steps to prepare for Making Tax Digital (MTD) for VAT before it becomes mandatory for all VAT-registered businesses from 1 April 2022, HMRC has said. 


From 1 April 2022, all VAT registered businesses must file digitally through MTD. HMRC is reminding businesses below the previous £85,000 threshold they need to be ready for this change.  


Businesses need to have signed up to MTD for their first VAT return starting on or after 1 April 2022. Businesses must sign up to MTD at least five days after their last non-MTD VAT return deadline date, and no less than seven days before the first MTD VAT return deadline date or the company may have to pay VAT twice.


Under the new rules, it will be mandatory to keep digital records under MTD. This can be done through software or by using bridging software. Bridging software must have digital links in place to ensure that records are kept digitally as information is transferred between platforms.  


Those who do not sign up will be charged a penalty for failure to do so. Some VAT-registered businesses may be eligible for an exemption from MTD, if it is not reasonable or practical for them. If a business has previously been granted an exemption for VAT online filing, this will carry over to MTD for VAT requirements.


MTD is designed to help businesses eliminate common errors and save time managing their tax affairs.


Agents can sign up on behalf of a business, although businesses remain responsible for meeting their VAT obligations. To sign up to MTD VAT, businesses, or an agent on a business’ behalf, need to:

  1. Visit and choose MTD-compatible software
  2. Keep digital records starting from 1 April 2022 or the beginning of their VAT period
  3. Sign up and submit their VAT return through MTD.


Last year, the government announced that MTD for Income Tax Self-Assessment (ITSA) will be introduced a year later and will now come into effect in the tax year beginning in April 2024, giving businesses more time to prepare.


For more information regarding MTD for VAT, please contact your local Lentells office:

Chard –, 01460 64441

Seaton –, 01297 20584  

Taunton –, 01823 286274