MTD for VAT – Making Tax Digital VAT Compliance Made Simple

Moving to Digital VAT Reporting Doesn’t Have to Be Complicated

If you run a VAT-registered business in the UK, chances are you’ve already received emails, letters, or reminders about Making Tax Digital for VAT.

For many business owners, the first reaction is usually confusion.

You might be wondering:

• Do I need to sign up for MTD for VAT?
• What are the Making Tax Digital VAT requirements?
• Do I have to change my accounting software?
• Can I still use spreadsheets?
• What happens if I file VAT returns the old way?

These are all valid questions — and you’re not alone in asking them.

Making Tax Digital has fundamentally changed how VAT is recorded and submitted in the UK. But while the rules sound technical, the reality is much simpler once you understand how the system works.

At Audit Consulting Group, we work with businesses every day that are transitioning into MTD — from sole traders registering for VAT for the first time to established companies needing full digital migration.

Our role is to make the entire process smooth, compliant, and stress-free.

This page explains everything you need to know about MTD for VAT — who it applies to, what’s required, how submissions work, and how we support you.

Understanding What MTD for VAT Actually Is

Making Tax Digital for VAT is HMRC’s requirement for VAT-registered businesses to keep records digitally and submit VAT returns using compatible software.

In practical terms, this means your VAT process must now follow a digital chain from start to finish.

Your financial data must:

• Be recorded electronically
• Be stored in digital systems
• Flow through compatible software
• Be submitted directly to HMRC

The old method of typing VAT figures manually into HMRC’s online portal has been phased out for MTD-mandated businesses.

Instead, VAT returns are now generated within accounting software and sent digitally through secure HMRC integrations.

The purpose behind this shift is to reduce human error, improve accuracy, and modernise the UK tax system.

Why Making Tax Digital Was Introduced

HMRC estimates that billions of pounds in tax revenue are lost annually due to avoidable reporting mistakes.

Many of these errors come from manual processes such as:

• Handwritten records
• Spreadsheet miscalculations
• Missing transactions
• Incorrect VAT treatments

By requiring digital record keeping and automated reporting, HMRC aims to close this gap.

From a business perspective, this also brings benefits:

• More accurate VAT reporting
• Better financial visibility
• Automated calculations
• Reduced compliance risk

While the transition may feel like extra work initially, most businesses find digital accounting far more efficient once implemented.

Businesses That Must Comply With MTD for VAT

One of the most common questions we hear is:

“Do I need Making Tax Digital for VAT?”

If you are VAT registered in the UK — the answer is yes.

MTD applies regardless of turnover level.

This includes:

• Sole traders
• Limited companies
• Partnerships
• Contractors
• Consultants
• eCommerce sellers
• Property businesses registered for VAT

Even businesses below the VAT threshold must comply if they voluntarily registered for VAT.

In short — VAT registration automatically brings MTD obligations.

The VAT Threshold and Its Role in MTD

Historically, Making Tax Digital applied only to businesses above the VAT registration threshold.

However, HMRC expanded the scope.

Now, the threshold is no longer the deciding factor.

Whether your turnover is:

• Above the VAT threshold
• Below the threshold but VAT registered

You are still required to comply with MTD for VAT.

This expansion brought thousands of smaller businesses into the digital reporting system.

Digital VAT Record Keeping – What HMRC Expects

At the core of MTD compliance is digital record keeping.

HMRC requires businesses to store specific VAT data electronically.

This includes:

• Sales income
• VAT charged on sales
• Purchases and expenses
• VAT paid on purchases
• VAT account summaries
• Adjustments and corrections

These records must be stored within digital systems capable of producing VAT returns.

Paper ledgers or handwritten notes alone are not compliant.

What Qualifies as a Digital Record

Digital records can exist in several formats — provided they meet HMRC standards.

Compliant examples include:

• Cloud accounting software
• Digitally linked spreadsheets
• Integrated invoicing platforms
• Automated bookkeeping tools

However, there must be a digital link between data sources and submission systems.

Manual copy-and-paste breaks compliance.

We help businesses audit their record systems to ensure they meet HMRC’s digital link rules.

Compatible Software – The Technology Behind MTD

To submit VAT returns under Making Tax Digital, businesses must use HMRC-approved software.

This software must be capable of:

• Recording VAT transactions
• Calculating VAT liabilities
• Generating VAT returns
• Submitting data electronically

Most modern cloud accounting platforms already support MTD integration.

Key features often include:

• Real-time bank feeds
• Automated expense capture
• Invoice generation
• VAT reporting dashboards

Choosing the right system depends on your transaction volume and business structure.

Using Spreadsheets Under MTD – Is It Still Allowed?

Many businesses prefer spreadsheets — and HMRC still allows their use under certain conditions.

However, spreadsheets alone are not MTD compliant.

To remain compliant, they must connect to HMRC through bridging software.

Bridging tools create a digital submission link without requiring full accounting platform migration.

We advise clients on whether bridging or full software adoption is more efficient long-term.

The Role of VAT MTD Registration

Before filing VAT returns digitally, businesses must formally register for MTD with HMRC.

This step links your VAT number to your accounting software.

Registration includes:

• Signing up for MTD through HMRC
• Authorising software access
• Verifying business details
• Activating digital submissions

Incorrect registration can delay VAT filings — so many businesses choose professional setup support.

How VAT Returns Work Under Making Tax Digital

One of the biggest changes businesses notice under MTD isn’t just the software — it’s the way VAT returns are prepared and submitted.

Before Making Tax Digital, many businesses handled VAT like this:

They gathered invoices at the end of the quarter, calculated VAT manually (often in spreadsheets), and then typed the totals into HMRC’s online portal.

It worked — but it left a lot of room for error.

Under MTD, that process becomes fully digital from start to finish.

Instead of manually entering totals, your VAT return is generated directly from your accounting records. The software calculates VAT automatically based on the transactions you’ve recorded.

This means your VAT reporting becomes a live reflection of your bookkeeping — not a rushed quarter-end exercise.

The Digital Submission Journey

To understand how submit VAT return MTD works in practice, it helps to look at the full journey.

Every VAT return begins with day-to-day bookkeeping.

Each time you:

• Issue an invoice
• Record a purchase
• Log an expense
• Receive income

That transaction is stored digitally within your accounting system.

The software automatically assigns VAT codes and calculates VAT amounts in real time.

By the end of the VAT quarter, the system has already built your VAT position.

The return is then generated — not manually created.

Once reviewed, it is submitted directly to HMRC via secure API integration.

No retyping. No duplication. No manual upload.

What Happens Each VAT Quarter

Every VAT-registered business operates within VAT periods — usually quarterly.

Under MTD, each quarter follows a structured compliance cycle.

Throughout the quarter, transactions must be recorded digitally and accurately.

This includes:

• Sales invoices issued
• Customer payments received
• Supplier invoices logged
• Business expenses captured

At quarter end, your VAT liability is calculated automatically.

This includes:

• Output VAT (VAT you charged customers)
• Input VAT (VAT you paid on expenses)

The difference between the two determines whether you owe VAT or receive a refund.

The return is then submitted digitally through MTD-compatible software.

Why Real-Time VAT Visibility Matters

One unexpected benefit of MTD for VAT is financial visibility.

Because records are digital and updated continuously, businesses can see their VAT position at any time — not just at quarter end.

This allows for:

• Better cash flow planning
• Advance VAT budgeting
• Early error detection
• Real-time profit monitoring

Many clients tell us this is one of the biggest operational improvements after moving to digital accounting.

The Role of Automation in VAT Reporting

Automation is central to MTD compliance.

Modern accounting software can:

• Pull bank transactions automatically
• Match income to invoices
• Categorise expenses
• Apply VAT codes

This reduces manual admin and improves reporting accuracy.

However, automation still requires oversight.

Incorrect VAT coding — even in automated systems — can create compliance risks.

That’s why many businesses combine software with professional accountant review.

VAT Coding – A Critical Compliance Area

Every transaction recorded digitally must include the correct VAT treatment.

This is known as VAT coding.

Examples include:

• Standard rate VAT
• Reduced rate VAT
• Zero-rated supplies
• Exempt transactions

Applying incorrect codes can lead to:

• Overpaid VAT
• Underreported VAT
• HMRC corrections
• Potential penalties

We conduct VAT coding reviews to ensure transactions are classified correctly.

Marketplace & eCommerce VAT Complexity

For online sellers, MTD for VAT introduces additional layers of complexity.

Businesses selling via platforms like Amazon or Shopify often deal with:

• Multiple VAT jurisdictions
• Marketplace facilitator rules
• Mixed VAT treatments

Some sales may have VAT collected by the platform, while others remain the seller’s responsibility.

This must be reflected correctly in digital VAT records.

Our team regularly supports eCommerce clients in structuring compliant VAT reporting systems.

Multi-Software Digital Links

Some businesses operate using multiple systems — for example:

• Accounting software
• Inventory management tools
• POS systems
• Expense apps

Under MTD, these systems must be digitally linked.

This means data must flow electronically — not manually copied.

Broken digital links (such as exporting CSV files and editing manually) can breach HMRC compliance rules.

We audit system integrations to ensure digital continuity.

Bridging Software in Practice

For spreadsheet-based businesses, bridging software provides a middle ground.

Rather than replacing spreadsheets entirely, bridging tools:

• Extract VAT totals
• Convert data into digital format
• Submit returns to HMRC

This is often a transitional solution for businesses not ready to adopt full cloud accounting.

We help clients evaluate whether bridging is sustainable long-term or if full migration is more efficient.

Record Retention Requirements

Under VAT digital record keeping UK rules, businesses must retain VAT records digitally for a minimum statutory period.

Records include:

• Sales invoices
• Purchase invoices
• VAT account summaries
• Adjustments
• Submission reports

Maintaining organised digital archives is essential for audit readiness.

Internal Controls & VAT Accuracy

As businesses grow, VAT reporting risks increase.

We often implement internal controls such as:

• Approval workflows
• Expense validation
• VAT reconciliation reviews
• Quarterly compliance checks

These controls strengthen reporting accuracy under MTD systems.

Common Transition Challenges

Moving into Making Tax Digital isn’t always seamless.

Businesses often face challenges such as:

• Legacy bookkeeping cleanup
• Software migration issues
• Staff training needs
• VAT coding corrections

This is completely normal.

Our role is to guide businesses through the transition without disrupting operations.

How Long MTD Setup Typically Takes

Implementation timelines vary depending on complexity.

For example:

• Small sole trader → Faster setup
• VAT-registered company → Moderate setup
• Multi-system business → Longer integration

Planning early ensures compliance before VAT deadlines arise.

What Happens If You Don’t Comply With MTD for VAT

One of the most common concerns business owners raise is simple:

“What actually happens if I don’t comply with Making Tax Digital for VAT?”

Some assume it’s just a technical requirement — something HMRC might not strictly enforce.

In reality, MTD compliance is monitored closely.

If a VAT-registered business that falls within MTD requirements attempts to submit VAT returns outside the digital system, the submission will usually be rejected automatically.

But the implications go beyond rejected filings.

Failure to comply with Making Tax Digital VAT requirements can expose your business to financial penalties, compliance scrutiny, and long-term reporting risks.

Late VAT Return Submissions Under MTD

VAT deadlines haven’t changed under MTD — but enforcement has become more structured.

VAT returns must still be submitted quarterly (unless you’re on a different scheme), and late submissions can trigger penalties.

The difference is that digital reporting makes submission tracking more precise.

HMRC systems automatically log:

• Filing dates
• Submission timestamps
• Payment timing
• Amendment history

If a return is submitted late, penalties may apply depending on frequency and severity.

The Points-Based VAT Penalty System

HMRC now operates a points-based penalty regime for late VAT submissions.

Here’s how it works in simple terms:

Each late VAT return earns a penalty point.

Once a business reaches the penalty threshold, a financial fine is issued.

The threshold depends on filing frequency:

• Quarterly filers → Lower threshold
• Monthly filers → Higher threshold

Points remain on record for a compliance period, meaning repeated late submissions escalate consequences quickly.

This system encourages consistent digital compliance rather than occasional corrections.

Late VAT Payment Interest

Submitting your VAT return is only one part of compliance — payment timing matters just as much.

If VAT owed is paid after the deadline, HMRC may apply:

• Late payment interest
• Surcharges for repeated delays

Because MTD software calculates VAT liabilities in real time, HMRC expects businesses to be fully aware of what they owe before deadlines arrive.

This makes late payment less justifiable from a compliance perspective.

Non-Digital Record Penalties

Another area businesses often overlook is record-keeping compliance.

Even if VAT returns are submitted digitally, businesses must still maintain compliant digital records behind those filings.

If HMRC reviews your VAT systems and finds:

• Manual record systems
• Missing digital audit trails
• Broken software links
• Offline VAT calculations

You could face compliance warnings or financial penalties.

MTD isn’t just about submission — it’s about the integrity of your digital reporting chain.

Increased HMRC Audit Risk

Businesses that fail to comply with MTD requirements often face higher scrutiny.

Digital reporting allows HMRC to analyse patterns more easily, including:

• Filing inconsistencies
• VAT repayment anomalies
• Reporting gaps
• Data mismatches

Non-compliant businesses are statistically more likely to receive VAT enquiries or inspections.

Professional MTD setup significantly reduces this risk.

How We Help Businesses Stay Fully MTD Compliant

Transitioning into Making Tax Digital for VAT can feel technical — but with the right support, it becomes straightforward.

At Audit Consulting Group, we provide a fully managed MTD VAT service designed to remove stress and ensure complete compliance.

Our support covers every stage of the journey.

MTD Eligibility & Compliance Review

We begin by assessing your VAT status and confirming your MTD obligations.

This includes reviewing:

• VAT registration
• Filing frequency
• Current record systems
• Software compatibility

This ensures your compliance position is clearly understood from the start.

VAT MTD Registration

If you haven’t yet registered for MTD, we handle the full signup process with HMRC.

This includes:

• Linking your VAT account
• Authorising digital submissions
• Activating software connections

Correct registration is essential before digital filing can begin.

Software Setup & Migration

We help businesses implement or transition to MTD-compatible software.

This includes:

• Software selection guidance
• Account setup
• Chart of accounts structuring
• VAT code configuration
• Staff training

Our goal is to ensure your system is compliant — and easy to use.

Digital Record Implementation

We digitise and structure your bookkeeping processes so that all VAT records meet HMRC standards.

This covers:

• Income recording
• Expense capture
• VAT treatment mapping
• Digital document storage

Strong digital foundations make ongoing compliance effortless.

VAT Return Preparation & Filing

For businesses outsourcing VAT compliance, we provide full quarterly filing support.

We:

• Review bookkeeping data
• Validate VAT calculations
• Prepare VAT returns
• Submit digitally via MTD software

You gain compliance confidence without internal admin burden.

Error Corrections & Amendments

If previous VAT returns were submitted incorrectly, we manage amendments and corrections within MTD frameworks.

This protects your compliance history and reduces enquiry risk.

Why Businesses Choose Audit Consulting Group for MTD VAT

Our clients work with us because we combine technical compliance with practical business support.

They value:

• Clear, jargon-free guidance
• Fast system implementation
• Reliable VAT submissions
• Ongoing compliance monitoring
• Direct HMRC liaison

We don’t just make you compliant — we make the process easy to manage long term.

Ready to Get Your MTD for VAT Handled?

If you’re VAT registered and unsure whether your systems meet Making Tax Digital requirements, now is the time to act.

Whether you need full setup, software migration, or ongoing VAT filing support — we’re here to help.

Audit Consulting Group will:

• Confirm your MTD obligations
• Implement compliant systems
• Digitise your VAT records
• Submit your VAT returns
• Keep your business penalty-free

Speak with our team today and get your MTD VAT compliance handled professionally.

Frequently Asked Questions — MTD for VAT

Do all VAT-registered businesses need MTD?
Yes. If you’re VAT registered in the UK, MTD compliance is mandatory.

Can I still file VAT returns through HMRC’s old portal?
No. Returns must be submitted via MTD-compatible software.

Do I need to change accounting software?
Only if your current system isn’t MTD compliant. We assess this for you.

Are spreadsheets allowed under MTD?
Yes — but only if connected through bridging software.

How often are VAT returns filed under MTD?
Usually quarterly, depending on your VAT scheme.

What happens if I miss a deadline?
You may receive penalty points and financial fines.

Can you register my business for MTD VAT?
Yes — we manage full HMRC registration.

Do you file VAT returns as well?
Yes. We provide ongoing quarterly MTD filing services.

Will MTD affect how much VAT I pay?
No — it changes reporting method, not tax rates.

Can you fix previous VAT errors?
Yes — we handle amendments and compliance corrections.

Choosing the Right Software for MTD VAT Compliance

One of the first practical steps businesses face when moving into Making Tax Digital for VAT is choosing software.

And this is often where confusion starts.

There isn’t just one MTD system — there are many.

Each platform offers different features, pricing models, automation levels, and reporting tools.

For some businesses, a simple bookkeeping system is enough.

For others — especially those with staff, inventory, or international sales — more advanced systems are needed.

What matters most is that the software is HMRC-recognised and capable of maintaining digital records and submitting VAT returns directly.

But compliance alone isn’t enough — usability matters too.

If software is difficult to operate, bookkeeping becomes inconsistent — which increases VAT risk.

That’s why we guide clients not just on what is compliant, but what is practical for their business day-to-day.

Cloud Accounting vs Traditional Systems

Most MTD-compliant platforms are cloud-based — and for good reason.

Cloud accounting allows businesses to:

• Access records from anywhere
• Integrate bank feeds automatically
• Upload receipts digitally
• Monitor VAT in real time
• Collaborate with accountants easily

Traditional desktop software can still be compliant, but often lacks automation and integration flexibility.

Many businesses transitioning into MTD use it as an opportunity to modernise their entire finance function — not just VAT reporting.

Software Integrations That Strengthen Compliance

Modern businesses rarely operate using one financial system alone.

You might have:

• Accounting software
• Payroll systems
• Inventory management tools
• Expense apps
• eCommerce platforms

Under MTD, these systems must communicate digitally where VAT data flows between them.

This is known as maintaining digital links.

For example:

Sales recorded in your eCommerce platform should transfer automatically into your accounting software without manual re-entry.

If staff export reports and manually input figures, this can break digital compliance rules.

We assess system integrations to ensure VAT data flows cleanly from source to submission.

Industry-Specific VAT Reporting Under MTD

Different industries face different VAT complexities — and MTD reporting must reflect these nuances.

For example, construction companies often operate under the Domestic Reverse Charge, which affects how VAT is recorded and reported digitally.

Retail businesses using point-of-sale systems must ensure daily takings are captured correctly in digital records.

Hospitality businesses deal with mixed VAT rates across food, beverages, and services.

Professional service firms may operate mostly on standard-rate invoices but still require digital expense tracking.

Each sector requires tailored MTD setup — not a one-size-fits-all approach.

MTD for VAT in eCommerce Businesses

Online sellers often face the most complex MTD VAT environments.

This is because their transactions are high-volume and multi-channel.

For example, an eCommerce business may sell through:

• Shopify website
• Amazon marketplace
• Etsy store
• eBay listings

Each platform generates separate financial reports.

Under MTD, these must all feed into one digital VAT record system.

In addition, marketplace facilitator rules may mean VAT is collected by the platform on some transactions but not others.

If these are reported incorrectly, VAT returns can be overstated or understated.

We regularly support eCommerce businesses in structuring platform integrations and VAT reporting workflows under MTD.

Cross-Border VAT & MTD Interaction

For businesses selling internationally, MTD compliance still applies to UK VAT reporting — even if they are also registered for schemes like OSS or IOSS.

This creates dual compliance layers:

UK VAT → Reported via MTD
EU VAT → Reported via OSS/IOSS

Ensuring transactions are allocated correctly between schemes is essential.

We implement reporting structures that separate domestic and cross-border VAT liabilities cleanly.

Landlords & Property Businesses Registered for VAT

While many landlords are not VAT registered, some property businesses are — particularly those dealing with commercial property or opted-to-tax buildings.

When VAT applies, MTD obligations follow.

This means:

• Digital rent records
• VAT on commercial leases
• Service charge VAT tracking
• Input VAT recovery

Property accounting software must integrate with MTD systems to maintain compliance.

VAT Schemes & Their Impact on MTD Reporting

Businesses operating under special VAT schemes must still comply with digital reporting rules.

Examples include:

Flat Rate Scheme — VAT calculated as a percentage of turnover.

Cash Accounting Scheme — VAT reported when payments are received rather than invoiced.

Annual Accounting Scheme — VAT returns filed annually with interim payments.

Each scheme changes how VAT is recorded digitally — but not the obligation to keep digital records and submit through MTD software.

Internal VAT Controls in the MTD Era

As VAT reporting becomes digital, internal controls become more important — not less.

Automation reduces manual work but introduces system reliance.

We often help businesses implement controls such as:

• Monthly VAT reconciliations
• Transaction review checkpoints
• Expense approval processes
• Software access controls

These safeguards reduce reporting errors and protect compliance integrity.

Preparing for Future MTD Expansion

While this page focuses on MTD for VAT, it’s important to understand that Making Tax Digital is expanding.

Future phases include:

• MTD for Income Tax
• MTD for Landlords
• MTD for Corporation Tax

Businesses already compliant with MTD VAT are in a stronger position to adapt when these phases arrive.

Digital systems implemented now will support future reporting requirements.

Why Early Digital Adoption Creates Long-Term Advantages

Businesses that embrace MTD early often discover operational benefits beyond compliance.

These include:

• Faster financial reporting
• Better cash flow forecasting
• Easier audit preparation
• Reduced bookkeeping backlog
• Stronger lender reporting

Digital accounting isn’t just a tax requirement — it becomes a financial management tool.

Building a Future-Ready Finance Function

For growing businesses, MTD acts as a catalyst for finance transformation.

We help clients move beyond basic compliance into structured digital finance systems.

This includes:

• Automated reporting dashboards
• Profit tracking tools
• Department cost analysis
• Forecast modelling

Compliance becomes the foundation — insight becomes the advantage.

Support Beyond VAT Filing

Many businesses initially approach us just to “submit VAT returns under MTD.”

But once systems are in place, they often expand support into:

• Bookkeeping outsourcing
• Payroll management
• Tax planning
• Financial forecasting

MTD becomes the starting point of a broader financial partnership.

When to Seek Professional MTD Support

You should consider professional support if:

• You’ve recently registered for VAT
• You’re unsure if your software is compliant
• You still use spreadsheets manually
• You’ve received HMRC compliance letters
• You want outsourced VAT filings

Early intervention prevents penalties and reduces transition stress.

Real Business Transition Stories — What Moving to MTD Actually Looks Like

When HMRC first introduced Making Tax Digital for VAT, many businesses assumed it would simply mean “using software instead of spreadsheets.”

In reality, the transition often goes deeper than that.

We’ve worked with hundreds of businesses moving into MTD — and while every case is different, certain patterns appear consistently.

Some businesses transition smoothly within weeks.

Others uncover years of bookkeeping gaps that need correcting before digital compliance can begin.

The difference usually comes down to how records were managed historically.

Example — Sole Trader Moving From Spreadsheets

A common scenario involves sole traders who’ve always tracked income and expenses manually.

They may have well-organised spreadsheets — but no automated VAT coding, no digital submission links, and no integrated reporting.

When moving into MTD, the transition typically involves:

• Migrating historical records
• Setting up accounting software
• Mapping VAT categories
• Linking bank feeds
• Testing submission connections

While the initial setup requires effort, the long-term benefit is reduced admin and clearer financial visibility.

Example — Growing Limited Company With Legacy Systems

Larger businesses often face more complex transitions.

We regularly see companies using:

• Outdated desktop accounting software
• Disconnected payroll systems
• Manual expense processing
• Offline VAT adjustments

Moving these environments into MTD requires structured migration.

This may include:

• Software replacement
• Data cleansing
• Integration rebuilding
• Staff retraining

But once implemented, reporting becomes significantly more efficient.

Example — eCommerce Brand Scaling Across Platforms

Digital retailers often assume they’re already “digital enough” for MTD.

After all, they sell online.

But selling digitally and reporting VAT digitally are two different things.

We’ve worked with eCommerce businesses selling across multiple platforms where:

• VAT was collected differently per channel
• Marketplace VAT was double-counted
• Refunds weren’t adjusted correctly
• International sales were misallocated

MTD forced these businesses to standardise reporting — ultimately strengthening compliance and financial clarity.

The Cost of Ignoring MTD Compliance

Some businesses delay MTD adoption because they view it as administrative overhead.

But the cost of non-compliance often exceeds the cost of proper setup.

Financial exposure may include:

• Late filing penalties
• Interest on unpaid VAT
• Rejected VAT returns
• Accountant rework fees
• HMRC investigations

Operational exposure can be just as serious:

• Cash flow disruption
• Inaccurate VAT forecasting
• Compliance stress near deadlines

Investing in compliant systems early prevents reactive crisis management later.

Technology Migration — What Businesses Should Expect

Moving into MTD-compliant systems often involves technology decisions.

Businesses typically face three options:

Remain on existing software if compliant.

Upgrade to modern cloud accounting systems.

Use bridging software as a transitional solution.

Each path has pros and cons depending on transaction complexity and growth plans.

We guide clients through these decisions based on long-term operational efficiency — not just short-term compliance.

Data Migration — A Critical Transition Phase

When changing systems, historical data must often be transferred.

This includes:

• Customer records
• Supplier accounts
• VAT balances
• Trial balances
• Transaction histories

Data migration must be handled carefully to avoid reporting inconsistencies.

Incorrect opening balances or VAT carryovers can distort future VAT returns.

We manage migration mapping and reconciliation to ensure continuity.

Staff Training & Operational Adoption

Technology alone doesn’t guarantee compliance — people must know how to use it.

We often provide training covering:

• Invoice creation
• Expense logging
• VAT code selection
• Report generation

Well-trained teams reduce bookkeeping errors and improve reporting reliability.

Advanced VAT Error Scenarios Under MTD

Digital reporting doesn’t eliminate errors — it simply makes them more visible.

We frequently correct advanced VAT issues such as:

Duplicate income reporting due to system integrations.

Incorrect VAT treatment on mixed-rate sales.

Failure to adjust VAT on refunds or credit notes.

Reverse charge misreporting.

Digital tools accelerate reporting — but oversight remains essential.

VAT Reconciliations in a Digital Environment

Regular VAT reconciliations remain critical under MTD.

This involves comparing:

• VAT account balances
• Submitted returns
• Payment records
• Adjustment entries

Discrepancies can signal coding errors or system integration issues.

We implement reconciliation frameworks for ongoing compliance assurance.

HMRC Visibility in the Digital Age

One major shift under MTD is the level of visibility HMRC has into business reporting.

Digital submissions provide structured datasets rather than manual totals.

This allows HMRC to analyse:

• Industry VAT patterns
• Refund anomalies
• Sales-to-VAT ratios
• Submission consistency

While compliant businesses have nothing to fear, inaccurate reporting becomes easier for HMRC to detect.

Proactive Compliance vs Reactive Correction

There are two ways businesses handle VAT under MTD:

Proactive compliance — systems structured correctly from the start.

Reactive correction — fixing errors after submission.

The latter is always more costly, stressful, and time-consuming.

Our approach focuses on prevention rather than correction.

Long-Term Operational Benefits of MTD Adoption

Beyond compliance, businesses often discover operational advantages once digital systems are embedded.

These include:

Automated financial reporting.

Live profit tracking.

Faster year-end accounts preparation.

Simplified audit processes.

Integrated tax planning visibility.

In many ways, MTD becomes a catalyst for modernising finance operations.

Scaling Finance Infrastructure With Business Growth

As businesses grow, VAT complexity increases.

Transaction volume rises.

Staff expense claims expand.

Inventory movements multiply.

Digital systems implemented for MTD scale alongside growth — maintaining reporting accuracy even as operations expand.

Why Businesses Outsource VAT Compliance Post-MTD

Many businesses initially try to manage MTD internally.

Over time, they realise the admin burden and risk exposure involved.

Outsourcing VAT compliance provides:

Professional oversight.

Submission accuracy.

Deadline monitoring.

Penalty protection.

Internal time savings.

This allows business owners to focus on operations rather than tax administration.

How We Help Businesses Transition Into MTD for VAT — Step by Step

By the time most businesses contact us about Making Tax Digital for VAT, they’re usually in one of three situations.

They’ve registered for VAT and realise they now need to comply with MTD.

They’ve heard about MTD but aren’t sure if their systems are compliant.

Or they’ve already tried to set things up themselves — and run into confusion around software, submissions, or HMRC registration.

Wherever you’re starting from, our role is to take that complexity off your plate and turn it into a structured, manageable process.

Initial Compliance Review

Everything begins with understanding your current position.

We look at:

• Your VAT registration status
• Current bookkeeping method
• Software (if any)
• Filing history
• Transaction volume

This allows us to confirm whether you’re already compliant, partially compliant, or need a full MTD setup.

For some businesses, only minor adjustments are required.

For others, we build a full digital reporting structure from the ground up.

Software Selection & Implementation

Choosing the right MTD-compatible software isn’t just about compliance — it’s about operational fit.

We recommend systems based on:

• Business size
• Transaction complexity
• Industry sector
• Integration needs
• Growth plans

Once selected, we handle the setup.

This includes:

• Account configuration
• VAT scheme setup
• Chart of accounts structuring
• User access controls

By the end of implementation, your software is fully aligned with HMRC’s Making Tax Digital VAT requirements.

Digital Migration & Record Structuring

If your records previously existed in spreadsheets or manual systems, we migrate them into compliant digital formats.

This process may involve:

• Data cleansing
• Transaction categorisation
• VAT code mapping
• Opening balance reconciliation

The goal is not just digital storage — but structured, submission-ready bookkeeping.

Strong record foundations make every future VAT return easier.

VAT MTD Registration With HMRC

Before VAT returns can be submitted digitally, your business must be formally enrolled in the MTD system.

We manage this entire process, including:

• HMRC signup
• Software authorisation
• Digital submission activation

This ensures there are no technical barriers when your next VAT return deadline arrives.

Ongoing VAT Return Filing Support

Many businesses choose to outsource VAT submissions once MTD is active.

This removes the risk of:

• Incorrect VAT calculations
• Late submissions
• Coding errors
• Compliance breaches

Our quarterly VAT filing service includes:

• Bookkeeping review
• VAT reconciliation
• Return preparation
• Digital submission
• Payment guidance

You maintain visibility — we manage compliance.

Error Corrections & Compliance Repairs

If your VAT reporting history contains errors — whether pre-MTD or post-transition — we manage corrections professionally.

This may include:

• Amending previous returns
• Adjusting VAT liabilities
• Liaising with HMRC
• Structuring forward compliance

Fixing errors early protects your business from enquiry risk later.

Ongoing Compliance Monitoring

MTD compliance isn’t a one-time setup — it’s an ongoing responsibility.

We provide continuous oversight, including:

• Filing deadline tracking
• Software compliance checks
• VAT coding reviews
• Submission confirmations

This ensures your business remains aligned with evolving HMRC digital reporting standards.

Why Businesses Prefer Fully Managed MTD VAT Support

Many businesses initially try to handle MTD internally.

But over time, they realise the administrative load and compliance risk involved.

Outsourcing provides:

• Peace of mind that submissions are accurate.
• Confidence that deadlines are met.
• Protection from penalties.
• Internal time savings.
• Access to VAT expertise when needed.
• For growing businesses, this support quickly becomes indispensable.

A Compliance Partner — Not Just a Filing Service

Our approach goes beyond submitting VAT returns.

We act as long-term compliance partners — helping businesses adapt to digital tax reporting as regulations evolve.

As Making Tax Digital expands into Income Tax and Corporation Tax, businesses already working with us are fully prepared for the next phases.

We future-proof compliance — not just manage current filings.

Ready to Get Your MTD for VAT Setup Completed?

If you’re VAT registered and unsure whether your current systems meet Making Tax Digital requirements, now is the time to act.

Delaying digital compliance can lead to rejected VAT returns, penalties, and operational stress near filing deadlines.

Audit Consulting Group will:

• Confirm your MTD obligations
• Implement compliant software
• Digitise your VAT records
• Register you with HMRC
• Submit your VAT returns
• Monitor ongoing compliance

You stay focused on running your business — we handle the reporting.

Speak With an MTD VAT Specialist Today

Whether you need full setup, software migration, or ongoing filing support, our team is ready to help.

We’ll review your position, explain your obligations clearly, and build a compliance structure that works for your business long term.

Making Tax Digital doesn’t have to feel technical or overwhelming — not when you have the right support behind you.