Making Tax Digital is mandatory for all VAT registered businesses

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Making Tax Digital for VAT is mandatory for all VAT registered businesses from 1 April 2022

Making Tax Digital is designed to help businesses eliminate common errors and save time managing their tax affairs. Since April 2019, businesses with a taxable turnover above £85,000 have already been required to follow Making Tax Digital, keeping digital records and filing VAT returns using compatible software.

From 1 April 2022, all VAT registered businesses must keep electronic records of sales and purchases and file their VAT return using Making Tax Digital, regardless of turnover.

What you must do for Making Tax Digital for VAT

You must sign up for Making Tax Digital for VAT if you haven't already signed up and you're VAT registered.

To sign up to Making Tax Digital for VAT, businesses, or an agent on a businesses’ behalf, need to:

Using a tax agent

You can hire a professional, such as an accountant, if you need help with your VAT. Agents can sign up on behalf of a business, although businesses remain responsible for meeting their VAT obligations. Those who do not join Making Tax Digital for VAT may be charged a penalty for failure to do so.

Making Tax Digital software

HM Revenue & Customs (HMRC) recognise that some businesses will experience upfront costs in joining Making Tax Digital. There are a range of compatible software products available for Making Tax Digital for VAT, allowing businesses to choose which tools they use to run their business and tax affairs. Find a list of software compatible with Making Tax Digital for VAT, including low-cost options.

Exemptions for Making Tax Digital

Some VAT-registered businesses may be eligible for an exemption from Making Tax Digital, if it is not reasonable or practicable for them to use digital tools for their tax. If a business has previously been granted an exemption for VAT online filing, this will carry over to Making Tax Digital VAT requirements. Find out how to apply for an exemption.

Further help and case studies

For businesses who need help and support on signing up for Making Tax Digital, HMRC is running a series of webinars. Find out about the help for Making Tax Digital.

Businesses already using Making Tax Digital for VAT have expressed a number of benefits. View example HMRC case studies from businesses who are currently benefitting from Making Tax Digital for VAT.

First published 11 January 2022