New guidance has recently been released by HMRC regarding further details for the process of their flagship ‘Making Tax Digital’ initiative which is poised to be rolled out as of April this year.

Making Tax Digital was first announced back in the 2015 budget in a bid to modernise & streamline the process by which businesses record & file all tax information. The initiative has seen several delays in its buildup, but this time however, it looks like nothing will derail HMRC from initiating the first stage of their MTD policy, as changes to the way businesses file VAT returns are imminent.

As well as keeping records digitally, the initiative will also require you to file them digitally. This means setting up an HMRC portal for VAT that is compatible under MTD. You may be thinking “I already have an HMRC online portal, so i’m all set!” – if only it were that easy.

Ensuring your business is set up on a digital platform that is recognised as compatible software, such as Xero, is the first step to becoming compliant with the Making Tax Digital initiative for VAT.

Step two will require you to sign your business up to the new MTD VAT portal, and linking it with your chosen digital software. Without linking the 2 platforms, you will be unable to file VAT returns with HMRC whether you are signed up to the service or not.

While this may seem like a confusing process, HMRC has released a very helpful instructional video guide for switching, or setting up your platform to the new MTD compatible version.


If you need further guidance on how to make the switch to the new VAT portal, your MTD obligations, or to discuss which digital accounting software best suits your business, Price Davis are more than happy to talk you through the process, and help you understand how to keep your business compliant. Feel free to get in touch with us on 01452 812491 or email