Making Tax Digital (for VAT) tool: who has to join?

Last Updated: 12 July 2019

This Virtual Tax Partner © 'VtaxP' © tool checks Making tax digital for VAT. Will it apply to me? Am I exempted? Am I deferred. Do I need new software to file VAT returns online?

Under Making Tax Digital (MTD) for VAT, known as 'Making VAT Digital' (MVD), most VAT registered businesses will have to report VAT in new way.

This tool aims to guide you through the requirements to see whether you will have to update your software or systems in order to file VAT returns under the MVD rules for return periods commencing or after 1 April 2019.

Let's get started:

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Making tax digital for VAT will not apply to you.

If you are unsure as to whether you should be registered see Registering for VAT

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How do I calculate turnover for MVD purposes?

  • At the end of each month you will calculate your turnover for the previous 12 months by adding together supplies you made with a UK Place of supply of goods or UK Place of supply of services that are:
    • Zero-rated supplies
    • Reduced-rated supplies
    • Standard rated supplies.
  • Do not include any supplies that have a place of supply outside the UK or that are exempt from VAT.
Useful reading: VAT registration: Historic turnover test

You have two options:

  • Continue to enter your VAT via the Government Gateway, or
  • Opt into making VAT digital and use functional compatible software to submit your VAT return to HMRC.

Don't forget to watch your turnover: if it exceeds £85,000 it will be compulsory to join making VAT digital.

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Are you excluded from VAT online filing due to the fact that you are a practising member of a religious society or order whose beliefs are incompatible with the use of electronic communications?

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Has an insolvency procedure commenced in relation to your business under section 81 (4B), (4C), and (5) of the VAT Act 1994?

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Is it not possible to make a return using a compatible software return system for reasons of disability, age, remoteness of location, or any other reason?

In order to claim that you are digitally excluded you will need to show/prove to HMRC that you:

  • Do not have/have limited broadband or internet access
  • Have very limited use of the internet
  • Are not a user of other forms of complicated software
  • Are too old or ill or have some other reason why you are unable to deal with the technical challenge of making VAT digital.
  • The software is proving too difficult to use

You may also have to have a very good reason for not being able to delegate your filing responsibilities to an agent or adviser.

Each case will need to be decided according your individual circumstances. Possible reasons why you are unable to delegate might be along the lines of the following excuses:

  • You do not have the means to engage someone else to file VAT online on your behalf
  • You have difficulty engaging with others.

It may be difficult to claim digital exclusion if you have already been filing VAT returns using HMRC's portal and you already use accounting software.

For further guidance and tribunal decisions on this topic, see Making VAT Digital: are you digitally excluded? If you have problems we recommend that you talk to your accountant or adviser and get assistance.

If you need to find a suitable adviser, then contact the Virtual Tax Partner support service: we will put you in touch with an accountant or adviser who is local to you.

In order to claim that you have a religious exclusion from making VAT digital you will either:

  • Be already excluded from online filing due to your current practicing beliefs (as already notified to HMRC), or
  • You will need to show/prove that you have become a practising member of a religious society or order whose beliefs are incompatible with the use of electronic communications

It will not be easy to make any claim if you are already a user of other forms of software

You will also have to have a very good reason for not being able to delegate your filing responsibilities to an agent or adviser

For further guidance and tribunal decisions on this topic, see Making VAT Digital: are you digitally excluded?. This also considers the interactions with beliefs and your hunan rights.

You should check whether an exclusion applies with the insolvency practitioner who is dealing with your case.

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  • A Trust
  • A 'Not for profit’ organisation that is not a registered company
  • A VAT division
  • A VAT group
  • A public sector entity required to provide additional information on their VAT return (Government department, NHS Trust, local authority)
  • A Public Listed company (PLCs)
  • A Trader based overseas
  • A person who is required to make payments on account for VAT
  • An annual accounting scheme user

You are in Making tax digital for VAT for your first VAT period commencing on or after 1 April 2019.

You obligations are to:

  • Keep your bookkeeping records for VAT digitally.

For VAT periods commencing on or after 1 April 2019:

  • You will no longer be able to use HMRC's portal to submit your VAT return
  • You must submit your VAT return information to HMRC through MTD functional compatible software
  • The initial requirement is that your software just has to submit the nine totals on the VAT return to HMRC.

From 1 April 2020

  • You will be required to use digitally linking software where you use two or more software packages to record your transactions for VAT. The idea is to avoid any manual keying in or 'cut and paste' from one record to another. Eventually, this will also allow HMRC to check that there are no gaps or unexpected variances in your data.
  • A new points based penalty system will apply for late filing non-compliance

Further information & assistance:

See Making VAT digital for more information, if you need it.

Try this if you need Links to software for MVD

If you need a person to help, then contact the Virtual Tax Partner support service: we will put you in touch with an accountant or adviser who is local to you.

Exemption from any of HMRC's making VAT digital requirements has to be formally agreed by HMRC.

You will need to either phone HMRC's helpline, or write in to your VAT office and make your case for exemption.

HMRC's 2015 research noted that 15% of the population are digitally excluded and 37% require extra assistance in using digital channels. For further research, cases on digital exclusion etc see Making VAT Digital: am I excluded from filing?

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  • HMRC deems you to be a VAT-registered business with complex reporting requirements.
  • You are not being mandated into MVD until 1 October 2019, unless you are a business who use the GIANT (Government Information and NHS Trust) service.

This date may change, it depends on the results of testing (the MVD pilots).

Businesses who use the GIANT (Government Information and NHS Trust) service, are not mandated to join until April 2022.

See Making VAT Digital: a detailed subscriber guide

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Making tax digital for VAT applies to you. This means that you are required to:

  • Keep your bookkeeping records for VAT digitally
  • You must submit your VAT return information to HMRC through MTD functional compatible software
  • The initial requirement is that your software just has to submit the nine totals on the VAT return to HMRC.

From 1 April 2020

  • You will be required to use digitally linking software where you use two or more software packages to record your transactions for VAT. The idea is to avoid any manual keying in or 'cut and paste' from one record to another. Eventually, this will also allow HMRC to check that there are no gaps or unexpected variances in your data.
  • A new points based penalty system will apply for late filing non-compliance

Further information & assistance:

See Making VAT digital for more information, if you need it.

Try this if you need Links to software for MVD

If you need a person to help, then contact the Virtual Tax Partner support service: we will put you in touch with an accountant or adviser who is local to you.

  • Exemption from any of HMRC's making VAT digital requirements has to be formally agreed by HMRC.

  • You will need to write in to your VAT office and make your case.

  • You will need to supply evidence: your insolvency professional should be able to assist you with this.

See Making VAT Digital: a detailed subscriber guide

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Comments (4)

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  2. #251
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I know this post is a bit old, but if you could clarify something a little off topic that would be great. I'm a Sole trader non-VAT registered. As far as i'm aware going tax digital takes effect April 2020 for me. Does that mean i'll still be...

I know this post is a bit old, but if you could clarify something a little off topic that would be great. I'm a Sole trader non-VAT registered. As far as i'm aware going tax digital takes effect April 2020 for me. Does that mean i'll still be able to do my self assessment through HMRC's site like I did for my previous self assessment (18/19) and do the same for 2019/2020 and then continue April 6th forward using digital accounting software from that point forth. Tried asking the question via HMRC's webchat and they weren't sure as MTD was different from there section apparently.

Many Kind Regards, Robert.

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  2. #254
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Robert, you do your self assessment as normal for 2019/20 and 2020/21, using HMRC's online software or your own. It is anticipated that different groups of taxpayers will be mandated into Making Tax Digital for income tax from perhaps, April...

Robert, you do your self assessment as normal for 2019/20 and 2020/21, using HMRC's online software or your own. It is anticipated that different groups of taxpayers will be mandated into Making Tax Digital for income tax from perhaps, April 2021, and then you will probably need to consider software for your bookkeeping and reporting.

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  2. #150
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the mtd turnover test calculator is a bit sketchy in that it doesn't make explicitly clear how value of standard rated supplies calculated is with regard to whether one includes or excludes output vat.

Ie for net sales of £1000 vat of £200 and...

the mtd turnover test calculator is a bit sketchy in that it doesn't make explicitly clear how value of standard rated supplies calculated is with regard to whether one includes or excludes output vat.

Ie for net sales of £1000 vat of £200 and gross sales of £1200
Do we use £1200 or £1000

to be fair to your calculator tool all advise other advise out there seems to be equally sketchy in that regard so you are not alone in your sketchiness :)




How do I calculate turnover for MVD purposes?

At the end of each month you will calculate your turnover for the previous 12 months by adding together supplies you made with a UK Place of supply of goods or UK Place of supply of services that are:
Zero-rated supplies
Reduced-rated supplies
Standard rated supplies.
Do not include any supplies that have a place of supply outside the UK or that are exempt from VAT.
Useful reading: VAT registration: Historic turnover test

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  2. #154
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Comments noted. Many thanks for the feedback - will have a re-write and add links to the tests.

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