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Making Tax Digital (MTD) for VAT l QuickBooks Online

by Intuit•14• Updated 1 month ago

Learn how Making Tax Digital (MTD) affects your business and how to stay compliant using QuickBooks Online. This article covers everything you need—from key dates and setup steps to exemptions and FAQs—to help you manage your VAT obligations with confidence.

This article is for customers who use QuickBooks Online. If you are an accountant or bookkeeper, see the Accountants' guide to setting up for MTD for VAT in QuickBooks.

What is Making Tax Digital (MTD)?

Making Tax Digital is HMRC’s initiative to modernise the UK tax system by moving from paper and spreadsheets to digital record-keeping and submissions.

Since April 2021, VAT-registered businesses have had to use MTD-compatible software—such as QuickBooks Online—to keep digital records and submit VAT returns directly to HMRC.


Does MTD for VAT apply to me?

Yes. As of April 2022, all VAT-registered businesses must comply with MTD, regardless of turnover. If you’re registered for VAT, you’re automatically signed up for MTD for VAT and must use compatible software to keep your records and submit your VAT returns.

You don’t need to manually sign up unless HMRC has granted you an exemption or you’ve applied for one.


Set up and use MTD for VAT in QuickBooks

Learn how to set up MTD (Making Tax Digital) for VAT in QuickBooks Online so you can track taxes and submit VAT returns electronically to HMRC.

Use this checklist to make sure you’re fully prepared to file an MTD VAT return:

  • VAT is set up correctly in QuickBooks
  • You’ve entered the correct VAT registration number and scheme
  • MTD is enabled and QuickBooks is connected to HMRC
  • You have your Government Gateway credentials
  • You’ve reviewed your VAT codes and figures

Use this timeline to understand how and when MTD applies to your business:

April 2021VAT returns can no longer be submitted using the old method on HMRC’s website.
April 2022All VAT-registered businesses must use MTD-compatible software to submit VAT returns.
November 2022HMRC’s old online VAT return portal closed to most businesses.
April 2026MTD for Income Tax begins for self-employed individuals and landlords with annual income over £50,000.
April 2027MTD for Income Tax will extend to those with income over £30,000.

Is QuickBooks Online MTD-compliant?

Yes. QuickBooks Online is fully compliant with MTD and lets you store digital records and file VAT returns directly with HMRC.

What is a digital record?

A digital record is a digital copy of the transactions that make up your VAT return. QuickBooks keeps these automatically as you record sales and purchases.

Can I use QuickBooks if I’m on the Flat Rate VAT Scheme?

Yes. QuickBooks Online supports the Flat Rate Scheme. Just ensure you enable the MTD feature and connect to HMRC before submitting returns.

Can I submit VAT returns using two different QuickBooks accounts for the same VAT number?

Yes, but not for the same period. For example, if you’ve submitted a VAT return for 1–31 January 2021, you can’t file for earlier periods using the same QuickBooks account.

To submit missed returns for earlier periods, use a QuickBooks trial account.

Can I submit VAT returns for multiple companies under the same VAT number?

Yes, if the companies share the same VAT registration number, you can combine their figures and submit one return using QuickBooks Bridging Software.

If each company has a different VAT number, you’ll need to submit returns separately for each.

What VAT schemes are supported?

QuickBooks Online MTD supports Standard VAT, Cash Accounting Scheme and Flat Rate Scheme (FRS). QuickBooks Bridging Software supports Standard VAT and Cash Accounting Scheme

Note: MTD submissions aren’t currently supported if your home currency is not GBP.


Exemptions from MTD for VAT

Some businesses may not need to follow MTD rules. This section explains who qualifies and how to apply.

You may be exempt if:

  • You can’t use digital tools due to age, disability, location, or religious beliefs
  • You’re already exempt from filing VAT online
  • You’re subject to an insolvency procedure

Locations not affected:

Businesses based in the Isle of Man, Jersey, or Guernsey are currently not required to comply with MTD for VAT.

See the HMRC guidance for more information on exemptions.

To apply for exemption, contact HMRC by phone or in writing. Include:

  • Your business name and address
  • Your VAT registration number
  • Why you believe you’re exempt
  • How you currently file VAT returns
  • A signed authorisation letter (if applying on someone else’s behalf)

HMRC will assess your application and reply by post. Continue filing your VAT returns as usual while you wait for a decision.


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