We’re back with another MTD for VAT reminder! And this time it affects all VAT-registered businesses. 

Starting Tuesday‌‌‌ ‌‌1‌‌‌‌‌‌ ‌‌November 2022, all 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. HMRC are closing the portal to file VAT returns the old way – so you really don’t have a choice any more.

This blog post is for you if:

  • You don’t keep digital records or you’re not yet using an MTD compatible software
  • You’re not signed up for MTD for VAT


From this point onwards you’ll no longer be able to use your existing VAT online account to send monthly or quarterly VAT returns.


If you’re registered for VAT, regardless of whether your business is above or below the VAT threshold of £85,000 you will need to keep digital records

MTD for VAT was the first phase of Making Tax Digital and kicked in from April 2019. First off, it was only applicable to those above the VAT threshold. Then, from April 2022, it applied to all VAT-registered businesses – whether you’re a sole trader or limited company. Now, from November 2022, HMRC won’t allow you to use your old VAT online account to submit VAT returns.

And it’s not just about using accounting software to file your VAT returns. You also have to keep digital records. Keeping a digital image of a bill or receipt and uploading them directly to your accounting software means you no longer have to keep the paper records. Eventually, keeping paper records will be a thing of the past!


The first step to getting MTD-compatible is to choose your software

We recommend (and work exclusively with) Xero. Yes we know we are always talking about Xero. And in our view Xero is always going to be the right place to start for small businesses. 

There’s more to Xero than just a good compatibility choice. Xero is at the heart of a wider ecosystem of apps that help you to do things like:

  • Allow you to quickly upload receipts and invoices – you’ll need to do this to maintain digital records for your current and future VAT returns. 
  • Introduce better payment methods so your customers can pay you easier and faster
  • Automatically chase unpaid invoices for you
  • Help you oversee and manage your stock so you have greater control


Understand more about the benefits of Xero on our dedicated Xero page

We recommend getting support when moving to a new accounting software. Consulting with a Xero specialist is the best way to go. We can help make sure you’re set up confidently and nothing is missed in the transition. 


Secondly, you’ll need to sign up to MTD for VAT

If you file annual VAT returns you will still be able to use your VAT online account until 15‌‌‌‌‌‌ ‌‌May 2023. If you file monthly or quarterly returns, you’ll need to register for MTD for VAT now. 

You can sign up to MTD for VAT by visiting the registration page and entering the following information:

  • Your business email address
  • A Government Gateway user ID and password – if you don’t have a user ID, you can create one when you use the service
  • Your VAT registration number and latest VAT return
  • If you’re a sole trader you will also need to provide your National Insurance number
  • Your company registration number and Unique Taxpayer Reference


We can deal with HMRC on your behalf

You can have an agent (that’s us!) deal with HMRC on your behalf and make sure you’re completely compliant with all the new rules. For most of our clients, this is a big stress reliever and one less thing on their plate to worry about. 

There are no silly questions here at Starfish. If you’re nervous about the tech or the work involved with new software, schedule a chat with us to get clarity and peace when it comes to next steps. Dealing with tax changes and HMRC updates is our bread and butter – let us help make it easy for you. That’s what we’re here for.