Making Tax Digital

In July 2020, HMRC announced that all VAT-registered businesses must file digitally through Making Tax Digital from April 2022, regardless of turnover. This means you need to:

1. Keep digital records starting from 1 April 2022 or the beginning of your VAT period.

2. Submit your VAT Return through Making Tax Digital.

Don’t panic! It’s easy and free to do both with My Tax Digital.

Getting Help

You should find answers to the majority of commonly asked questions in the following documentation, however should you need further assistance then please email: mytaxdigital@openanswers.co.uk

About My Tax Digital

My Tax Digital (formerly Portico) is free Making Tax Digital for VAT bridging & accounting software. All you need to get going is a recent version of a popular web browser (e.g. Chrome, Firefox, Safari, Edge etc) then just browse to My Tax Digital and click the Register button. Watch the How-To video and follow the step by step instructions below.

You can manage multiple businesses with just a single account. If you need to submit VAT returns for multiple businesses (i.e. you’re an agent or own multiple businesses), simply create a separate business for each all under the one account.

There’s also nothing stopping you from creating multiple accounts, you’ll just need a separate email address for each.

Registration

1. Browse to My Tax Digital in a modern browser such as Google Chrome or Firefox.

2. Click on “Register”

   

3. Enter your name, business name (this could just be your name as well if you’re a sole trader), your email address and a secure password. If you want to use My Tax Digital to submit VAT returns to HMRC then also tick “The business is VAT registered”. Your registration details will not be shared with anyone else.

   

4. Click on “Register”

5. Your account is now registered, and you will be able to sign in by following the steps under Signing in below

   

Signing in

1. Browse to My Tax Digital in a modern browser such as Google Chrome or Firefox.

2. Click on “Sign In”

   

3. Enter the email address and password associated with your My Tax Digital account

4. Click “Sign in”

   

5. A Secure Passcode will have been emailed to you.

6. Enter the Passcode from the email and click “Verify”

   

7. If you didn’t receive an email, first check your spam folder or failing that, click on the “Request a new passcode” link.

8. Once signed in, you’ll be asked to select which of your businesses you wish to manage.

   

Submitting a VAT return

We’ve tried to make submitting your VAT return as painless as possible. Watch our handy How-To video and follow the step by step instructions below.

Sign up for Making Tax Digital with HMRC (This is no longer required after 24th November 2022 since HMRC will automatically enroll all VAT registered businesses for Making Tax Digital)

1. Before you can submit a VAT return, you must visit the HMRC website and sign up for VAT (MTD) first, otherwise you will receive the message “The client and/or agent is not authorised” when trying to submit a VAT return within My Tax Digital. HMRC should send you a confirmation email within 72 hours of signing up. Agents wishing to sign up new clients for MTD should follow the instructions here before continuing.

2. On the HMRC website you need to select “Yes” you are ready to submit VAT return and then click continue on the following page.

   

   

3. Select either “I use accounting software” or “I use spreadsheets” since My Tax Digital supports both.

   

4. Click continue on the next page and then sign in using your Government Gateway user ID and password and follow the instructions.

Grant My Tax Digital authority to access HMRC

1. Once you have the confirmation from HMRC, sign in to My Tax Digital and click on the MTD VAT tile.

   

2. Click on the VAT Return tile.

   

3. If you’ve not enabled VAT in My Tax Digital, you’ll see the following screen.

   

4. Click on Yes, enable VAT.

5. Click Continue to HMRC Sign-in.

   

6. Click Continue to grant My Tax Digital authority to interact with HMRC on your behalf.

   

7. You’ll need your Government Gateway credentials associated with the business you want to submit a VAT return for.

   

8. Sign in using your Government Gateway ID and password.

   

9. After successfully signing in, click, Give Permission.

10. You will be redirected back to My Tax Digital, click Okay.

    

11. When prompted, enter the 9 digit VAT Registration Number (VRN) for this business and click Save. If you make a mistake and associate the wrong VRN with this business then it is possible to change it by clicking on the ‘Edit’ button next to the VRN in the top right of any of the MTD VAT screens. If you need to submit VAT returns for multiple businesses (i.e. you’re an agent or own multiple businesses), create a separate business for each VRN by clicking on ‘Create Business’ rather than editing the VRN and submitting returns under a single business.

    

VAT Submission Mode

Once you’ve authorized My Tax Digital to interact with HMRC, you can now submit a VAT return.

On the VAT submission page, you need to decide how you want to use My Tax Digital to file your VAT return.

Bridging Mode

If you already have your VAT figures and simply want to submit them to HMRC, select Bridging Mode.

1. Click on the “Import spreadsheet or CSV” button to upload your figures corresponding to the 9 VAT boxes on the form. This creates a Digital Link from your existing accounting software/spreadsheet and means you’ll be compliant with HMRC Making Tax Digital for VAT. Supported file formats include .xls, .xlsx, .ods and .csv

2. Click Import, to upload your figures to My Tax Digital.

   

3. If the VAT figures selected are incorrect, you can change the sheet and cell references to pick the correct ones.

   

Accounting Mode

If you use My Tax Digital for keeping your digital records as well as filing your VAT return, select Accounting Mode. My Tax Digital will calculate your VAT figures based on the business transactions you entered under Income and Expenses for the selected VAT period.

Whichever mode you choose, it will be set as the default for next time, but you can always swap to the other mode should you wish to.

Reviewing and submitting your VAT return

1. When the 9 boxes are populated with your VAT figures, select the Declaration which applies to you and click Review & Submit.

   

2. On the following screen you will get a final opportunity to check your figures are correct because once submitted, the only way of amending them is to contact HMRC directly. Assuming the figures look correct, click Submit. If not, click Cancel in order to correct them before submitting.

   

3. On successful submission to HMRC, you will be presented with a VAT Return Receipt which contains proof of your submission. My Tax Digital stores these receipts and they can be accessed via the VAT Return Receipts tile.

   

Creating a Digital Link

Fortunately, making a Digital Link to My Tax Digital is very straightforward. Simply follow these steps to digitally transfer your VAT figures from a spreadsheet into My Tax Digital:

1. Create a spreadsheet with your 9 VAT amounts or download our Example Spreadsheet Template

   

2. Follow the steps under ‘Submitting a VAT return’ and after choosing Bridging Mode on the VAT submission page press ‘Import spreadsheet or CSV’ and select your spreadsheet. The values will then auto-populate the VAT return and you can then submit them to HMRC.

Supported VAT Schemes

My Tax Digital supports Cash, Standard, Margin and Flat Rate VAT schemes.

Cash Accounting Scheme

With the VAT Cash Accounting Scheme, you pay VAT on your sales when your customers pay you and reclaim VAT on your purchases when you have paid your supplier.

Standard Accounting Scheme

With the Standard VAT Accounting Scheme, income is reported when you raise an invoice for a customer and expenses are reported when you receive an invoice from a supplier.

Flat Rate Scheme

The Flat Rate Scheme allows your business to apply a fixed flat rate percentage to your gross turnover to arrive at the VAT due. Fixed rate percentages vary depending on the type of business. See VAT Notice 733: Flat Rate Scheme for small businesses for more details or speak to your accountant.

If you select Accounting mode and Flat Rate scheme then My Tax Digital will calculate the VAT return figures for you based on the income and expenses transactions and the Flat Rate % selected.

If you select Bridging mode and Flat Rate scheme then My Tax Digital will not calculate any of the VAT figures for you and instead you will need to make sure that the figures you import via CSV or spreadsheet are pre-calculated.

In Bridging mode, the scheme selection and flat rate percentage exist solely for record-keeping purposes and appear on the VAT return receipt following successful VAT submission.

Regardless of whether you use Accounting or Bridging mode, the key is to double check that the figures you see on the “Review VAT Return” screen are correct since these 9 figures will be ones transmitted to HMRC when you click the final submit button.

Margin scheme

The VAT margin scheme taxes the difference between what you paid for an item and what you sold it for, rather than the full selling price. You pay VAT at 16.67% (one-sixth) on the difference. See Adding margin scheme transactions.