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Businesses who are mandated into Making Tax Digital for VAT for VAT accounting periods starting on or after 1 April 2019 must use 'functional compatible software'.

Key requirements

1. To keep records in electronic form (digially).

2. To use functional compatible software.

3. To submit VAT returns via your software to HMRC.

If you are computer literate, and not excluded from MVD on the grounds such as being digitally 'inept', then you must now use software that can directly report your VAT returns to HMRC. 

Under MVD you will not be allowed to use HMRC's current online VAT service and key your return figures in directly. 

In terms of software issues:

For the initial phase of MVD your software is required to submit the 9 figures that make up the VAT return to HMRC.

What are digital links?

Practical concerns and examples

The needs of the business and the potential issues for MVD depend the type of business and the tools it is using to record its VAT transactions, see Making VAT Digital (subscriber guide)