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Making Tax Digital


What You Need to Know

There is so much information regarding Making Tax Digital (MTD). It's easy to get bogged down in it all and still not really know what to you need to do!

As of 01 April 2019 VAT-registered businesses with a taxable turnover above the VAT threshold are required to use the MTD services to keep digital records and use software to submit their VAT returns.

This means you will no longer be able to log into your HMRC VAT account online and submit a return. From 01 April 2019, the next VAT return your business is required to submit will need to be through the new MTD system.

Here is our simple guide to what you need to do to make sure you're ready.

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1. Check your Software is MTD-ready

HMRC have published a list of all software that will allow you to submit your MTD returns.

If you currently use Xero, great! Xero is MTD-compliant, so you won't need to upgrade.

Sage 50 is also MTD-compliant, but we would recommend checking your version. You will find all the details required in the Help / About section of your Sage software. Make a note of the Version Number, located in the Program Details as well as the Serial Number and Account number, located in Licence Information and then enter the details on this web page to find out.

2. Let your Software Know you will be Submitting MTD Returns

When you know you are using MTD-ready software you will need to update the submission settings before submitting your first MTD return.

If you use Xero visit this web page and follow the steps, you may need to connect to HMRC again with your Government Gateway ID and password.

On Sage you will need to go to Company Preferences / VAT / and tick the check box to enable Making Tax Digital for VAT submissions. If you use SageOne the process is similar, go to the Financial Settings, Making Tax Digital and Authenticate.

3. Signing up for MTD with HMRC

When everything is in place ready for your first return, you will need to sign up on the HMRC website - do this here, you’ll need your Government Gateway user ID and password as well as the VAT number of your business.

Before signing up with HMRC you may want to watch this short video from HMRC explaining the MTD sign up process and the information required.

You should receive a confirmation email within 72 hours and then another email to confirm the new payment reference number now you are signed up to MTD. If you pay by Direct Debit nothing will change but the payment will show the new reference on your bank statement and you must have signed up at least 15 days before your first submission is due to allow the payment to be taken correctly and in time. You can sign up before 01 April 2019 if you are ready. There is no need to wait.

If you have any questions regarding Making Tax Digital or you need some help to make sure you are ready, give our bookkeeping team a call.


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