Every VAT-registered UK business must keep digital VAT records and file VAT returns through Making Tax Digital-compatible software. Returns are usually quarterly; the return and payment are due one month and seven days after the end of each period. Late returns earn penalty points, and late payment earns interest and penalties.
Key points
- Making Tax Digital (MTD) applies to all VAT-registered businesses.
- Usual deadline: 1 month and 7 days after the VAT period ends.
- File a return even if nothing happened (a nil return).
- Use HMRC-recognised software or bridging software from spreadsheets.
What MTD requires
- Keep VAT records digitally (sales, purchases, VAT charged and reclaimed).
- Submit returns from compatible software connected to HMRC.
- Keep a digital link between records and the return (no retyping figures between programs).
Deadlines and payments
| Quarter ends | Return and payment due |
|---|---|
| 31 March | 7 May |
| 30 June | 7 August |
| 30 September | 7 November |
| 31 December | 7 February |
Your periods depend on your registration (“stagger”); check them in your business tax account. Direct Debit payments are collected a few days after the deadline.
Penalties
For returns, HMRC uses a points system: each late return adds a point, and when you reach the threshold for your filing frequency (4 points for quarterly filers) you get a fixed penalty. Late payment attracts interest and, after a grace period, a separate late payment penalty. Filing on time and setting up a Direct Debit avoids both.
Choosing software
HMRC lists recognised software on GOV.UK. Most cloud accounting packages support MTD; if you keep records in spreadsheets you can use bridging software. If you buy a VAT-registered company, set up software and authorise it with HMRC before your first return is due.
Official sources
This guide is general information, not legal or tax advice. Rules and fees change; check the official sources above or speak to a UK accountant before you act.