Accounting technology / Glossary / MTD for VAT software

What is MTD VAT software?

Definition

MTD VAT software keeps a business's VAT records digitally and sends its VAT returns to HM Revenue and Customs through the Making Tax Digital API. Every VAT-registered business must use it unless exempt. It can be full accounting software or bridging software that links spreadsheets to HM Revenue and Customs.

Also calledMTD for VAT softwaremaking tax digital VAT software

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HMRC finder: Around 470 products
Authority lasts: 18 months
Copy and paste: Not a digital link

What MTD VAT software must do

VAT Notice 700/22 says functional compatible software records and preserves digital records, sends returns to HM Revenue and Customs through the API platform and receives information back. The records include the business name, address, VAT number and VAT schemes, plus the tax point, net value and VAT rate of each sale and the value and input tax of each purchase. Records can sit in more than one program, and a spreadsheet counts if it is API-enabled or digitally linked to software that is. Every transfer between programs must be a digital link, such as linked cells, a CSV import or an API transfer; copying and pasting does not count. HM Revenue and Customs's software finder lists around 470 products, with filters for businesses or agents, record keeping or bridging, free versions, Welsh and accessibility features, and the authority given to software lasts 18 months. Exemptions cover digital exclusion through age, disability or location, insolvency and religious objections. Free versions in the finder include FreeAgent, ANNA and 1 2 3 Sheets, and QuickFile files the first VAT return free, then costs £60 plus VAT a year. Pandle Pro costs £5 a month plus VAT and Xero Ignite £18 a month excluding VAT.

Common questions

Is there free MTD VAT software?+

HMRC's finder has a free version filter; FreeAgent, ANNA, Countingup and 1 2 3 Sheets are marked with one. QuickFile files the first VAT return free, then costs £60 plus VAT a year.

Can I use a spreadsheet for MTD for VAT?+

Yes, if it is API-enabled or digitally linked to bridging software that sends the return. Copying and pasting or retyping figures between programs does not count as a digital link.

Who has to use MTD VAT software?+

Every VAT-registered business, unless HM Revenue and Customs exempts it for digital exclusion, insolvency or religious reasons, or it is already exempt from filing VAT returns online.

How much does MTD VAT software cost?+

Pandle Pro costs £5 a month plus VAT, Xero Ignite £18 a month excluding VAT, QuickFile £60 plus VAT a year and ANNA £4.50 plus VAT per spreadsheet VAT filing.