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Signing up for Making Tax Digital for VAT – step by step for businesses

Businesses that will be filing their own MTD for VAT returns need to follow the preliminary steps of understanding the MTD for VAT requirements, agreeing responsibilities with any third party bookkeeper or agent and choosing MTD for VAT software.

Once these steps have been taken, there are two specific extra steps to be completed to implement MTD for VAT.

These are:

  1. Sign up to MTD for VAT at the correct time
  2. Authorise the businesses’ MTD for VAT software

1. Sign up to MTD for VAT at the correct time

Each business needs to sign up individually to MTD for VAT. This will remain the case when MTD for VAT goes live in April 2019; HMRC will not automatically transfer businesses to MTD for VAT.

The sign up process can be initiated either by a business or by their agent – where there is doubt, agree where responsibility for completing this step lies. Businesses can sign themselves up on Sign up for Making Tax Digital for VAT using their existing government gateway user credentials or, if they prefer, a new government gateway ID specifically for MTD for VAT.

The timing of this step is critical – it is the point of no return. A business should not sign up to MTD for VAT until all its non-MTD for VAT returns have been filed. Once a business has been signed up to MTD for VAT it will not be possible to file any VAT returns through the government gateway online VAT return or using non-MTD compatible XML VAT filing software.

Allow at least 24 hours after submitting the last non-MTD VAT return before signing up (more if payment is made by direct debit – see below). HMRC will send immediate acknowledgement and will follow this up with an email (usually within 24 hours, but it can take up to 72 hours) confirming that the business can now use their MTD software to file a VAT return. Do not attempt to file the first MTD for VAT return until the confirmatory email has been received.

Those that pay by direct debit have a more restricted time period in which they can sign up, due to the impact of banking regulations. Where payment is made by direct debit the business cannot sign up in the 5 working days after the submission deadline for the last non-MTD VAT return and must sign up at least 7working days before the first MTD for VAT return is filed.

This can be illustrated as follows:

Monthly filers that pay by direct debit:

First MTD for VAT return
Sign up period starts
Sign up period ends 
March 2019 (pilot)
15 April 2019
25 April 2019
April 2019
15 May 2019
30 May 2019

Quarterly filers that pay by direct debit:

First MTD for VAT return Sign up period starts  Sign up period end
Jan/Feb/Mar 2019 (pilot)
Already started
25 April 2019
Feb/Mar/Apr 2019 (pilot)
Already started
30 May 2019
Mar/Apr/May 2019 (pilot)
15 April 2019
27 June 2019
Apr/May/Jun 2019
15 May 2019
30 July 2019
May/Jun/Jul 2019
17 June 2019
29 August 2019
Jun/Jul/Aug 2019
15 July 2019
27 September 2019

If you have a problem with this step HMRC recommends using the ‘Get help with this page link’ on the gov.uk page where the problem arises. This will raise a ticket with the relevant HMRC helpdesk which will respond with specific assistance. The alternative is to phone the VAT helpline on 0300 200 3700 and ask to speak to the MTD team.

2. Authorise the businesses’ MTD for VAT software

Before a VAT return can be filed from MTD for VAT software, the software must be authorised to communicate with HMRC systems. This process is initiated from the software product and will look slightly different in each product. The process involves:

  • Checking that the product has been upgraded by the software supplier to be MTD for VAT compatible
  • Entering the businesses’ government gateway user credentials into the software
  • Providing additional details including setting up 2SV (two step verification)
The software will require reauthorisation periodically - at least every 18 months but sometimes more frequently. If you have a problem with this step check with your software provider.