HMRC will no longer be supporting Non-Making Tax Digital (MTD) VAT submissions using accounting software from April 2021. This change does not affect businesses already filing returns under MTD, it is only for ‘voluntary filers’ still using the old ‘Non-MTD’ filing system.

Accounting software including Quickbooks, Xero and Sage, previously offered the facility to submit non-MTD VAT returns online using legacy technology (the VAT XML channel). From 8 April 2021, this old technology will no longer be available within accounting software packages. VAT returns for February 2021, will be the final non-MTD submissions that can be made using the existing method.

For all voluntary filers, including those below the VAT threshold, still submitting non-MTD VAT returns through their accounting software, the removal of the XML channel means changing the way returns are submitted and choosing one of two options.

Option one – registering for MTD for VAT (our usual recommendation)

All VAT-registered businesses, regardless of their threshold, will need to move to MTD for VAT by April 2022 – so the simplest way to respond to the deactivation of the old legacy system is to register now for MTD for VAT.

This means VAT submissions can still be submitted in the same way, using familiar software, and there will be time to get accustomed to MTD for VAT ahead of the legal requirement in 2022.

To register for MTD for VAT, users will need their Government Gateway account and will be required to enter the following information:

  • VAT number;
  • The date the business was VAT registered;
  • The amount of the last VAT return and the month in which it was submitted.

Businesses can sign up for MTD for VAT here.

Direct debits

If paying by direct debit, HMRC recommend registering for MTD for VAT at least 5 working days after the last non-MTD submission and at least 7 working days before the first MTD submission.

If the submission is not by Direct Debit, sign-up must be at least 72 hours before the first MTD submission.

Option two – delaying MTD for VAT and using bridging software

For those clients that are not quite ready to register for MTD for VAT, including those under the MTD threshold of £85,000, the VAT return can still be generated using some form of bridging software – such as the M+A OneClick facility.

VAT submissions can also be made manually using the HMRC website portal. If accounting software is being used along-side the HMRC portal, a VAT report for the period will need to be manually created, with the values copied into the HMRC website.

Should you have any queries on the changes to filing VAT returns or need help or advice signing up to MTD for VAT then please either get in touch with your usual M+A Partners contact or email and we will be happy to help.