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MTD VAT Returns

This section covers how to authorise My Tax Digital with HMRC and use the app to prepare and file your MTD VAT Returns.

HMRC Authorisation

You must complete this step before you can view any VAT details or submit a return.

  1. Go to VAT Section: Navigate to the VAT menu from your dashboard.
  2. Click on the prominent "Authorise with HMRC" button.
  3. Government Gateway Redirection: You will be securely redirected to the HMRC Government Gateway website.
  4. Log In and Consent: Enter the Government Gateway user ID and password associated with your VAT-registered business. HMRC will ask you to confirm that you consent to My Tax Digital accessing your VAT data and submitting returns on your behalf.
  5. Return to App: Once consent is granted, you will be automatically redirected back to My Tax Digital. Your VAT status will now show as "Authorised".

Submission Modes: Accounting vs. Bridging (Digital Links)

My Tax Digital supports two ways to prepare your VAT return data:

Mode How it Works Best For
Accounting Mode You use the Transactions section within the app for all your sales and purchases. The app automatically calculates the nine boxes for your VAT return based on your entered data. Users who want to keep all their digital records in My Tax Digital.
Bridging Mode (Digital Links) You keep your records in a separate spreadsheet or system. You then import a summary of the nine VAT boxes into My Tax Digital for submission. This import maintains the required 'digital link' from your source data. Users who prefer to use a spreadsheet (e.g., Excel) or other basic software for record-keeping.

Supported VAT Schemes

When calculating your VAT return, the app supports the following common VAT schemes:

Scheme Name VAT Calculation Method
Standard Accounting Scheme VAT is due on the date the invoice is issued or received, regardless of whether the money has been paid or collected.
Cash Accounting Scheme VAT is due on the date you receive payment from a customer or the date you pay a supplier.
Flat Rate Scheme You pay a fixed percentage of your VAT inclusive turnover. The system supports this by applying the correct fixed rate based on your business sector.
Margin Scheme Used for selling second-hand goods, works of art, or antiques. VAT is calculated only on the difference between the sale price and the purchase price (your margin).

Submitting Your VAT Return

This section explains how to file your VAT return to HMRC after you have authorised the app and completed your digital record-keeping.

1. Submission Mode and Scheme

  1. Navigate to Submission: From the main menu, select Submit VAT Return. This screen shows your current status and options.

  2. Choose Submission Mode: Under the "How would you like to file your VAT return?" heading, select one of the following:

    • Accounting: Choose this if you've logged all sales and purchases directly in the app's Transactions section. My Tax Digital will automatically generate the figures from your records.
    • Bridging: Choose this if you kept your records in a separate spreadsheet or system. This mode maintains the required digital link by allowing you to import a summary of the figures.

  3. Review Period and Scheme: Check the Period & Scheme section to ensure the correct VAT Scheme (e.g., Standard) and VAT Period dates are displayed. If you need to file a different period, click "Change Period".

2. Import Figures (Bridging Mode Only)

If you chose Bridging mode, you must import your figures before proceeding.

  1. Import File: Click the "Import spreadsheet as CSV" button.
  2. Upload: Select your CSV file containing the summary figures for the nine VAT boxes. The system will map and display these figures on the screen.
    • Note: If you are in Accounting Mode, this step is skipped, and figures are automatically populated from your app data.

3. Review VAT Figures and Declare

  1. Verify Figures: Review the VAT Figures section carefully. This shows the final amounts for the nine boxes that will be sent to HMRC. If you notice an error in an editable box, you can correct the figure here.

  2. Final Declaration: You must legally declare that the information is true and complete. In the Declaration section, select one option:

    • Taxpayer: Tick this if you are the business owner submitting the return yourself.
    • Agent: Tick this if you are a tax agent or accountant submitting on behalf of a client.

  3. Submit: Once you have reviewed the figures and ticked the correct declaration box, click the "Submit" button (usually located at the bottom of the screen) to securely file the return with HMRC. You will receive an HMRC receipt confirmation within the app.

VAT Return Receipts

This screen allows you to view proof of every VAT return successfully filed through My Tax Digital.

  1. View Receipts: Navigate to VAT Return Receipts in the VAT menu.

  2. Browse History: A list of previously submitted VAT periods and the submission date will be shown.

  3. View Details: Click on a period to see the full details, including the official Receipt ID provided by HMRC, the nine box figures submitted, and the submission date and time. This serves as your proof of filing.

Obligations

The Obligations screen displays all your past, current, and future VAT return deadlines as communicated by HMRC.

  1. Check Deadlines: Navigate to Obligations in the VAT menu.
  2. View Status: You will see a list of VAT periods. The status will indicate whether the obligation is Fulfilled (submitted) or Open (due or overdue).
  3. Action: For Open obligations, you can click through to the submission screen to prepare and file the return before the due date.

Liabilities

This screen shows your financial position with HMRC regarding your VAT account, specifically the amounts you owe or are due to reclaim.

  1. View History: Navigate to Liabilities in the VAT menu.
  2. Review Amounts: The system pulls data directly from HMRC to show:
    • Amount Due: How much VAT you owe for a given period.
    • Amount Reclaimed: How much VAT HMRC owes you for a given period.
  3. Payment Planning: Use this screen to track your total outstanding VAT liability.

Payments

The Payments section provides a historical record of all VAT payments made to or received from HMRC.

  1. Check Payments: Navigate to Payments in the VAT menu.
  2. Verify Transactions: View the date and amount of each payment made to HMRC and any refunds received from HMRC.
  3. Reconciliation: Use this screen to reconcile your bank records against HMRC's records to ensure all VAT payments have been correctly recorded.

Penalties

This screen shows any penalty charges or penalty points applied to your VAT account by HMRC.

  1. View Overview: Navigate to Penalties in the VAT menu.

  2. Summary: The top of the screen provides an overview, including the total value of any Late Submission Penalties and Late Payment Penalties applied.

  3. Detailed Information: Scroll down to see detailed information on any active or inactive penalty points, the regime threshold, and any principal charge references issued by HMRC.

HMRC Authorisation

This screen confirms the status of the permission you have granted to My Tax Digital to interact with HMRC's MTD systems.

  1. Check Status: Navigate to HMRC Authorisation in the VAT menu.
  2. Confirm Authority: This screen confirms that your authority is active. If the authorisation is close to expiring (MTD authorisation lasts for 18 months), you will be prompted here to Re-Authorise.
  3. Re-Authorise: Click the re-authorise link and follow the steps to log in to the Government Gateway again and renew the app's permission to act on your behalf.