Digitizing taxes for business: VAT

Under the tax digitization for VAT (MTDFV), traders who exceed the VAT limit must keep digital records for VAT purposes and provide HMRC with their VAT return information using MTD functionally compatible software.

It is not mandatory for businesses below the VAT limit to voluntarily register for VAT to keep digital records and update quarterly. However, such businesses may choose to join the plan. There are some exceptions from MTDfVAT. However, the exemption categories are strongly drawn and are unlikely to apply to most VAT registered businesses.