From‌‌‌ ‌‌Tuesday 1‌‌‌ ‌‌November 2022, clients will no longer be able to use their existing VAT online account to file their quarterly or monthly VAT returns.

Businesses that file annual VAT returns will still be able to use their VAT online account until 15‌‌‌ ‌‌May 2023.

By law, VAT-registered businesses must now sign up to Making Tax Digital (MTD) and use MTD-compatible software to keep their VAT records and file their VAT returns.

If clients do not sign up for MTD and file their VAT returns through MTD-compatible software, they may have to pay a penalty. The best way for businesses to avoid penalties is to start using MTD now.

Even if you already use MTD-compatible software to keep records and file your VAT returns online, don’t forget you must sign up to MTD before you file your next return.


What businesses need to do now, or they could face a penalty 

If you haven’t signed up to MTD and started using compatible software already, you must follow these steps now:

Step 1. Choose MTD-compatible software that’s right for you – you can find a list of software on GOV.‌‌‌UK.

Step 2. Check the permissions in the software – once you’ve allowed it to work with MTD, you can file VAT returns easily. Go to GOV.‌‌‌UK and search ‘manage permissions for tax software’ for information on how you should do this.

Step 3. Keep digital records for your current and future VAT returns – you can find out what records you need to keep on GOV.‌‌‌UK.

Step 4. Sign up for MTD and file future VAT returns using MTD-compatible software – to find out how to do this, go to GOV.‌‌‌UK and search ‘record VAT’.

Clients who file quarterly or monthly VAT returns must complete these steps in order to file their returns due after 1‌‌‌ ‌‌November.


How to apply for an exemption from using software 

If you are already exempt from filing VAT returns online or if your business is subject to an insolvency procedure, you’re automatically exempt.

You can check if you can apply for an exemption on GOV.‌‌‌UK, if it’s not reasonable or practical for you to use computers, software or the internet. HMRC will consider each application on a case-by-case basis.


As always, if you have any questions or concerns, contact our VAT team today!