Making Tax Digital

HMRC's initiative requiring businesses above the VAT threshold (and eventually all self-employed people) to keep digital records and submit tax returns through compatible software.

MTD is not optional for VAT-registered businesses. It is the law. Failure to comply results in penalties. It also means spreadsheet bookkeeping is no longer sufficient.

You register for VAT. From that point, you must use MTD-compatible software (Xero, QuickBooks, FreeAgent) to file your VAT returns. You can no longer submit them manually via HMRC's website.