What is Making Tax Digital?
Making Tax Digital (MTD) means you are no longer able to keep and submit manual VAT records and returns. Instead, HMRC will only accept VAT returns sent using software that supports Making Tax Digital for VAT, like Xero.
The use of this technology is mandatory so it’s a good idea to upgrade your software, or migrate your accounts, before the end of your next VAT period.
Once you're up and running, you should find it far easier to submit returns using online MTD software.
What to look for in online accounting software
Automatically calculates the tax you owe (including VAT and payroll tax).
Pulls transaction data straight from your bank, invoicing software, or POS systems.
Updates transactions daily, helping you to stay on top of bank reconciliation.
Peace of mind with free support and security monitoring - 24/7
Help is at hand
Get expert help and support whenever you need it at Xero Central. You can look up support topics and articles at any time. You can also ask questions, offer solutions, and find answers in discussions with other users, or get in touch with our friendly and knowledgeable support team members. With Xero offices and users all over the world, you’ll get a speedy response no matter where you are.
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More about VAT
Xero’s Making Tax Digital (MTD) software works for both VAT and non-MTD VAT returns. But once you sign up for MTD, you can only submit MTD VAT returns. You won't be able to return to the old VAT return to view or publish.
If the domestic reverse VAT charge applies to you, you need to use the standard (not flat) rate MTD VAT return in Xero. Xero has specific tax rates set up for use on invoices and bills in order to report the right amounts on the VAT return.
If you use spreadsheets for VAT, you can still connect to HMRC’s MTD system via Xero. Xero provides a tool that lets you upload VAT amounts, then send MTD VAT standard rate returns from Xero.