Businesses with a turnover above the VAT threshold (currently £85,000) are now required to keep digital records for VAT purposes and provide this information to HMRC using MTD compatible software.
The MTD requirement remains in place even if turnover subsequently falls below the VAT threshold.
Similarly, those businesses below the VAT threshold which have voluntarily registered for VAT can opt in to MTD.
Some exemptions are available; for example certain religious societies or individuals unable to use the system due to disability, age, or remoteness of location. A business may also be exempt if it is subject to insolvency procedures.
What software will I need?
MTD for VAT requires businesses to use ‘functional compatible software’. Businesses can use more than one piece of software to keep its digital records, but those separate software programmes must be “digitally linked”. You can find out more about digital software that is compatible with MTD for VAT here.