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How to sign up and register for Making Tax Digital for VAT

Making Tax Digital applies to all VAT registered businesses now. Read this guide to learn how to register for MTD.

Published 17 October, 20229 min read Share

Every VAT-registered business must file VAT Returns using Making Tax Digital (MTD) for VAT — HMRC’s old VAT online account can no longer be used for quarterly or monthly returns.

By law, you need to sign up to Making Tax Digital (MTD) and use MTD-compatible software for keeping VAT records and filing VAT Returns.

If you’re newly VAT-registered, or you’ve never got round to signing up, it’s worth sorting out now — after all, you don’t want to end up with a potential fine for not following the rules.

This article explains how to register for MTD for VAT if you’re new to it all.

Key takeaways

• MTD for VAT is mandatory for every VAT-registered business — HMRC’s old VAT online account can no longer be used for quarterly or monthly returns.
• You’ll need MTD-compatible software, a Government Gateway account, and details like your VAT number and latest VAT Return to sign up.
• You can register yourself, through your accounting software, or have your accountant do it on your behalf — but you’re still responsible for keeping digital records.
• It’s not possible to opt out of MTD for VAT, though limited digital exclusion applies for reasons like age, disability, remote location, or incompatible religious beliefs.
• If your turnover falls below the £88,000 deregistration threshold, you can apply to deregister from VAT entirely, which also ends your MTD obligations.

Here’s what this article covers:

Overview of Making Tax Digital for VAT

If your business is registered for VAT, you’ve probably heard all about Making Tax Digital (MTD), and MTD for VAT in particular.

Introduced in April 2019, it affected all VAT-registered businesses over the VAT threshold.

But now, MTD for VAT applies to all VAT-registered businesses. This includes businesses that are voluntarily registered for VAT and under the threshold.

They must store their VAT accounting records digitally and use compatible software for their VAT accounting.

MTD for VAT provides an opportunity to revolutionise your accounting.

By switching to software, or updating your current software to be compliant, you can both modernise and take advantage of the latest technologies.

At the same time, your overall accounting admin workload is reduced.

Can I submit VAT Returns as normal or do I need MTD VAT sign up?

Unfortunately not, no.

Since MTD for VAT was extended to all VAT-registered businesses, HMRC’s old VAT online account can no longer be used to file quarterly or monthly VAT Returns — you must sign up to MTD for VAT and use MTD-compatible software instead.

All VAT-registered businesses must now use MTD-compatible software to file VAT Returns.

If you don’t, you could face a penalty.

HMRC will write to any newly VAT-registered business, or any business that hasn’t yet signed up for MTD, to explain the requirement.

If you haven’t already registered, it’s best to make the change to your processes now rather than waiting. That starts with registering for MTD for VAT.

More details on that below…

How to register for a VAT account and submit a VAT Return online

If the taxable turnover of your business is under the VAT threshold and you’ve not already registered voluntarily for VAT, now might be the time.

Registering means you can reclaim VAT on things you purchase for your business.

Many businesses register voluntarily because it makes their operation appear more professional – especially when selling to other businesses.

The goal of Making Tax Digital for VAT is to simplify VAT accounting. So if you’ve been put off previously by the admin requirements of VAT accounting, it’s a great opportunity.

You can register for VAT online, or your accountant can do it for you. If doing it yourself, you’ll need to create a Government Gateway account for your business (if you don’t already have one).

Once you’ve registered for VAT, you’ll be sent your VAT number that you should then quote on your VAT invoices.

You should start accounting for VAT from the date that HMRC registers you.

Once you have your VAT number, you can also submit a VAT Return online when the time comes.

You can use accounting software to submit your VAT Return to HMRC.

What you need to register for MTD for VAT

To register for MTD for VAT, you’ll need gather together a few bits of information:

• The email address you use for your business
• The Government Gateway ID you use for the business
• Your VAT registration number
• Your latest VAT Return
• Your National Insurance number if you’re a sole trader
• Your company registration number and Unique Taxpayer Reference (UTR) if registering a limited company.

How to sign up for Making Tax Digital for VAT

You need to choose the software you intend to use before signing up for MTD for VAT.

You can register for MTD for VAT by clicking register for MTD at the Gov.uk website, then answer the questions, which will involve providing the information mentioned earlier.

There are limitations on when you can sign up – this stops you accidentally making a double payment for your current return.

You should not sign up less than seven days before your VAT Return is due, or less than five days after your VAT Return is due.

You should receive confirmation from HMRC within three days.

The MTD for VAT features in your accounting software need to be activated once you know your sign up details, as provided by HMRC.

Therefore, activation won’t be automatic. Speak to your software vendor if you’re unsure of what’s required.

Can my accountant complete my MTD VAT sign up for me?

Yes. Just ask them to do so on your behalf.

But bear in mind that this doesn’t mean you can ignore MTD for VAT’s requirements.

You still need to store your key VAT accounting records digitally and use software for your VAT accounting – even if your accountant then calculates your VAT bill and submits the VAT Return on your behalf.

Your accountant may ask that you link your accounting software with theirs.

How to ask to be digitally exempt from MTD for VAT

It’s not possible to opt out of MTD for VAT.

However, some businesses have genuine reasons why they’re unable to comply with Making Tax Digital.

These include the following:

• Reasons of age, disability, remoteness of location or, in HMRC’s words, “any other reason” that means it’s not “reasonably practicable” for the business owner to use digital tools to keep business records or submit returns. For example, a business without an internet connection because it’s on an island that’s off the grid might be considered exempt.
• Religious beliefs are incompatible with the requirements of MTD for VAT. This is typically that the individuals running the business are unable to use computers because of their beliefs.

To apply for exemption, call HMRC’s VAT helpline to discuss the situation and arrange alternative measures.

It’s important to note that if HMRC believes exemption isn’t appropriate, it may offer digital assistance to help your business get online support.

Can I deregister from VAT to avoid MTD for VAT?

Any VAT-registered business can ask to cancel their VAT registration with HMRC if they’re not eligible anymore or if taxable sales drop below the £88,000 deregistration threshold.

VAT registration can be cancelled online, or you can you fill in and then post a VAT7 form to HMRC.

HMRC says it takes three weeks for the cancellation to be confirmed.

This will include confirmation of the cancellation date, which you will already have set with HMRC. Typically, this is the date on which you make the request.

Up to that date, you should continue to observe VAT requirements.

You’ll need to submit a final VAT Return for the period up to the cancellation date.

This must account for stock and assets you have at the cancellation date if you could reclaim VAT when you bought them, and if the total VAT due is over £1,000.

MTD VAT registration methods

• Sign up directly with HMRC: Use your Government Gateway and follow HMRC’s step-by-step process.
• Sign up via MTD-compatible software: Many products guide you through MTD VAT sign up from within the app.
• Sign up through your accountant: Your agent can complete MTD VAT sign up on your behalf.

Troubleshooting: Common MTD VAT sign up issues

• Government Gateway details don’t match HMRC records: Double-check VAT number, business name, and address exactly as HMRC holds them.
• Signed up too close to the filing date: Wait until HMRC confirms your MTD sign up (can take up to 72 hours) before filing.
• Software not activated for MTD: Enable MTD for VAT in your software and reconnect to HMRC if needed.
• Agent authorisation missing: Ensure your accountant is authorised for MTD VAT services in their Agent Services Account.

MTD VAT registration checklist for UK businesses

• Confirm you are VAT registered and have your VAT number
• Choose and set up MTD-compatible accounting software
• Have your Government Gateway user ID and password
• Have your business email address to receive HMRC confirmations
• Have your latest VAT Return to hand
• Have your NI number (sole traders) or company number and UTR (limited companies)
• Sign up for MTD VAT with HMRC and wait for confirmation
• Activate MTD features in your software and connect to HMRC

Final thoughts on MTD for VAT

Now you know how to register for Making Tax Digital for VAT, you can take the steps to do so for your business.

And by using software to manage your VAT accounting, you’ll be able to revolutionise your processes.

Need more help with MTD for VAT?

Speak to your accountant about the requirements – they can help you examine processes in your business to see what needs to be adapted. Alternatively, visit the dedicated MTD hub for more information.

Signing up for Making Tax Digital for VAT FAQs

How do I sign up for Making Tax Digital for VAT?

Use HMRC’s MTD sign up service, then activate MTD in your compatible software before filing.

Do I need to sign up if my turnover is below the VAT threshold?

Yes. Since April 2022, every VAT-registered business should have been compliant with MTD for VAT.

Can I still file using my VAT online account?

No. Quarterly and monthly VAT Returns must be filed via MTD-compatible software.

Can my accountant sign up for MTD for VAT on my behalf?

Yes. Your accountant can complete MTD VAT sign up on your behalf. You’ll still need to store your VAT accounting records digitally and use compatible software, even if your accountant then calculates and submits your VAT Return for you.

Is it possible to opt out of MTD for VAT?

No, not in general. Some businesses can apply for digital exemption if it’s not reasonably practicable for them to use digital tools — for reasons such as age, disability, remote location, or religious beliefs — by calling HMRC’s VAT helpline to discuss their situation.

Editor’s note: This article was first published in September 2021 and has been updated for relevance.

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