The Making Tax Digital (MTD) for VAT regime started in April 2019 when businesses with a turnover above the VAT threshold of £85,000 became mandated to keep their records digitally and provide their VAT return information to HMRC using MTD compatible software.

In April 2022, MTD for VAT was extended to all VAT registered businesses with turnover below the VAT threshold of £85,000. Many businesses with turnover below the VAT threshold had already voluntarily chosen to use MTD for VAT.

More than 1.8 million businesses are using MTD for VAT and more than 19 million returns have been successfully submitted through MTD-compatible software since MTD for VAT was launched.

However, there remains many businesses that continue to use their existing Value Added Tax (VAT) online account to submit VAT returns. The option to submit VAT returns in this way will be closed on 1 November 2022.

This means that businesses who file their VAT returns on a quarterly and monthly basis will no longer be able to use the service from 1 November 2022. There are very limited exemptions available for businesses where HMRC has agreed they are exempt from MTD, for example, people who object to using computers on religious grounds.

HMRC lists the following steps that businesses who are not using MTD for VAT should action as a matter of urgency:

1. Choose MTD-compatible software – a list of software, including free and low-cost options, can be found on GOV.UK.
2. Check the permissions in the software – once a business has allowed it to work with MTD, they can file VAT returns easily. Go to GOV.UK to learn how to do this and search ‘manage permissions for tax software’.
3. Keep digital records for current and future VAT returns – a business can find out what records need to be kept on GOV.UK.
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’.

We would of course be happy to help you meet the necessary requirements. If you need any assistance, please do not hesitate to be in touch.

CIGMA Accounting

CIGMA Accounting Ltd is a forward-thinking accounting and tax firm based in London, dedicated to delivering high-quality compliance, tax planning, and business advisory services to entrepreneurs, landlords, and growing SMEs. With offices in Wimbledon and Farringdon, we combine local expertise with a tech-driven approach to simplify accounting. Our services include corporation tax filing, VAT compliance, HMRC investigation support, R&D tax credit claims, capital allowances optimisation, and bookkeeping automation. What sets CIGMA apart is our ability to blend traditional accounting rigour with AI-powered systems that reduce errors, save time, and provide real-time financial insights. Our team ensures that every client - from startups to high-net-worth individuals - receives a bespoke solution aligned with their growth goals. Whether you need strategic tax planning, help with HMRC disclosures, or a full outsourced finance function, CIGMA Accounting delivers clarity, compliance, and confidence.

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