So your business has a taxable turnover above the VAT threshold of £85K, which means you need to be VAT registered.

Making tax digital obligates that you are to keep digital VAT business records and make your returns using Making tax digital software.

Most businesses would be responsible for doing this in the VAT periods from or after the 1st of April 2019.  Any businesses that have a taxable turnover below the VAT threshold can take part in Making Tax Digital voluntarily.

VAT Agents are authorised to use MTD on behalf of their clients, as a business owner it maybe worth asking your agent of whens the best time to join MTD.

You must have the appropriate software package so if are already using one, its wise to find out if it is compatible. Lets say that your taxable turnover has decreased below the threshold of £85K then after April 1st 2019 you are still obliged to keep digital records and send your VAT returns using HMRC MTD compatible software.

Special requirements 

There are some businesses that have special requirements which are slightly complex who have been given 6 months to provide them with a test period before they are to join. The finalisation date for these are October 1st, 2019 to adopt storing records digitally and using MTD-compatible software for their VAT filings to HMRC.

For businesses that are below the sales of £85K, it is encouraged that they join MTD voluntarily in order to benefit from it.

There is also the option for businesses signing up for MTD for income tax.

So in order for your business to be MTD ready you would have to start keeping records digitally and ensure the software that you are using is compatible.

If you are not currently using any software, you would need to start considering a software which is suitable.

Digital record keeping using spreadsheets to calculate/summarise VAT is approved for getting the information required for your return which is sent to HMRC.

For digital records that you need to keep historically you must include:

  • The time of supply
  • Value of supply
  • VAT Rate
  • Business Name
  • Business address
  • VAT Registration number

Compatible Software

Any software that supports MTD must fulfil the obligations of digital records storing and the exchanging of data digitally with HMRC.

The storage of digital records can be kept in several formats. They don’t have to be held in one particular place and must be able to flow between applications for it to be exchanged digitally.

A spreadsheet is a component of digital record keeping if the records can exchange digitally with a product that is compatible with HMRC.

It is until 31st of March 2020 that businesses are to make sure all digital links are made between software products for MTD. Cut and paste method will be acceptable in-between now and then for the transferring of information.


This would be software that is able to take data from other applications and allow the user to send the required information to HMRC digitally. This could be a spreadsheet or record keeping system that’s in-house which the user can send digitally to HMRC.

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