All businesses that are required to be registered for VAT, or have voluntarily decided to file VAT returns by MTD (Making Tax Digital), should currently be submitting their returns directly from their MTD-compliant software.
However, those businesses that do not have to use MTD have, until 8 April 2021, been able to file VAT returns from their old software that may not be MTD compliant. This was known by HMRC as “XML filing”. This facility was withdrawn on 8 April 2021. You can no longer file VAT returns from non MTD-compliant software.
If your business currently uses an older version of software to file VAT returns you must either:
- Upgrade to MTD compliant software and sign up to MTD in time to file your next VAT return.
- Change to filing VAT returns by using the HMRC portal, this means manually filling in and submitting the online VAT form each VAT period.
If you choose the second option you need to be aware that from April 2022 MTD will become compulsory for all VAT registered businesses. Therefore, you may want to make the change to MTD sooner rather than have to change to manual submission and then change back to filing via MTD next year. You should discuss this with your accountant and software provider.
If you wish to continue filing from your software note that upgrading your software is not enough, you must also sign up (or be signed up) to MTD on HMRC’s website. You must also start keeping all relevant accounting records in digital form. Your accountant should be able to help you with this.