Making Tax Digital for VAT widens its scope

Making Tax Digital (MTD) is a long-held Government ambition to create an online tax filing and payment system. It also hopes to stimulate a migration to digital record keeping. Long-term, it's intended all business taxes will be part of MTD. From 1 April 2022 all VAT registered businesses must follow its rules regardless of turnover.

22 July 2020


Background and the current situation

The Government's Making Tax Digital Programme launched in April 2019 with its first scheme – Making Tax Digital for VAT.  To aid a smooth adoption, the Government introduced a gradual phasing in of eligible businesses. Compliance with Making Tax Digital for VAT requires a business to keep digital records and use MTD-compliant software to file their VAT returns.

Currently all VAT registered business with a taxable turnover above £85,000, must follow the rules for Making Tax Digital for VAT unless:

Businesses currently exempt are those:

Further exemptions are considered by HMRC on a case by case basis if it is not reasonable or practical for the business to use computers, software or the internet to follow the rules for Making Tax Digital for VAT. This could be because:



All change from 1 April 2022

In a recent announcement, the Government has said from 1 April 2022 all VAT registered businesses must follow these rules regardless of turnover.  This means that if a business' taxable turnover is below the VAT threshold of £85,000 it should keep digital records from its first VAT return period that starts on or after 1 April 2022.

Businesses can sign up to MTD for VAT any time in the run up to 1 April 2022. It will however be mandatory for them to have signed up before their first VAT return period that starts on or after 1 April 2022.  See more information here.


Can we help?

Our specialist VAT team have helped many businesses migrate to digital record keeping and comply with Making Tax Digital for VAT.  If you have questions or need help getting your business ready, please do contact them at email: vat@shipleys.com or call one of the Shipleys' offices.


Specific advice should be obtained before taking action, or refraining from taking action, in relation to this summary, if you would like advice or further information, please speak to your usual Shipleys contact.

Copyright © Shipleys LLP 2020

Current Issues

Women missing out on state pension

Thousands of women are thought to have been underpaid the state pension, thanks to a rule change in 2008 and computer errors.

Insolvency, Restructuring and Refinancing – IBSA Conference 2021

Shipleys is delighted to sponsor the International Business Structuring Association's (IBSA) Autumn conference, with Ben Bidnell joining the panel of expert speakers.
Autumnal leaves.

Pension freedom age to rise

The earliest age at which you can withdraw cash from a private pension, without facing tax penalties, is set to increase from 55 to 57 on 6 April 2028.