Guidance

Check when a business must follow the rules for Making Tax Digital for VAT

Find out if and when you (or your clients) need to follow the rules for Making Tax Digital for VAT, or apply for an exemption.

Most VAT registered businesses with a taxable turnover above £85,000 must follow the rules for Making Tax Digital for VAT.

If your business uses the VAT GIANT service you cannot sign up for Making Tax Digital yet. HMRC will contact you to tell you when the deadline is.

When to start following the rules

Follow the rules from your first VAT Return period starting on or after 1 April 2019, unless your business is in the deferral group.

HMRC will send you a letter to tell you that you’re in the deferral group. If you have not received a letter, you’re not in the deferral group.

If your business is in the deferral group, follow the rules from your first VAT Return period starting on or after 1 October 2019.

If your business’s taxable turnover is under £85,000

If your business’s taxable turnover is under £85,000, you do not have to follow the rules. You can follow the rules voluntarily.

How to follow the rules

You’ll need to:

When to start keeping digital records

Start keeping digital records from the date you start following the rules. This is either:

  • 1 April 2019
  • 1 October 2019 if you’re in the deferral group

When to sign up

If you do not pay by Direct Debit, sign up at least 72 hours before your return is due.

If you pay by Direct Debit, sign up at least 7 working days before or 5 working days after your return is due. Make sure your last Direct Debit has come out of your bank account before signing up.

When to submit a return using software

Use software to submit your first return due after you start following the rules.

The deadlines and frequency of your returns will not change after your sign up. To see when your next return is due, sign in to your VAT online account.

Who can apply for an exemption

Applications are assessed on a case by case basis. You might be exempt if you:

  • cannot use computers, software or the internet because of a disability or where you live
  • object to using computers on religious grounds

You’re automatically exempt and do not need to apply if:

  • you’re already exempt from filing VAT Returns online
  • your taxable turnover is below £85,000
  • you or your business are subject to an insolvency procedure

Apply

To apply for an exemption, call or write to HMRC. You’ll need:

  • your VAT registration number
  • your business name and address
  • details of how you currently file your VAT Return
  • the reason you think you’re exempt from Making Tax Digital
  • authorisation from the business (if you’re applying on someone’s behalf)

You’ll get a letter with HMRC’s decision. Until then, continue filing VAT Returns the way you usually do.

Published 8 February 2019
Last updated 16 July 2019 + show all updates
  1. Added translation
  2. If you pay by Direct Debit, wait until your last Direct Debit has gone out of your bank account before signing up. If you use the VAT GIANT service, you cannot sign up yet.
  3. Businesses that currently pay VAT by Direct Debit cannot sign up in the 7 working days leading up to, or 5 working days after their VAT Return is due.
  4. The bullet points at sub-heading 'Who must follow the rules from 1 October 2019' have been updated to include 'has a taxable turnover over £85,000'.
  5. Information on signing up voluntarily, when to sign up and who is exempt from Making Tax Digital for VAT has been added.
  6. If your business makes payments on account, you're in the deferral group and need to start following the rules for Making Tax Digital for VAT on 1 October 2019.
  7. First published.