How to Submit Your VAT Return to HMRC Under MTD (2026 Step-by-Step)

Making Tax Digital for VAT has applied to all VAT-registered businesses since April 2022. There are no turnover thresholds and no exemptions based on business size. Whether you are a sole trader, a limited company, a partnership, or a charity with a VAT registration, you are required to keep digital VAT records and submit returns through MTD-compatible software.

Exemptions are very limited and must be applied for separately from HMRC. They cover situations where it is not reasonably practicable to use software due to disability, age, remoteness, or other reasons. The vast majority of VAT-registered businesses do not qualify for an exemption and must comply.

If your business has recently crossed the VAT registration threshold (currently £90,000 in annual taxable turnover for the 2025-26 tax year), you will need to register for MTD at the same time as you register for VAT. Voluntarily VAT-registered businesses are also required to use MTD.

Three things must be in place before you can file your first MTD VAT return: digital VAT records, an MTD sign-up with HMRC, and MTD-compatible software authorised to speak to HMRC on your behalf.

Digital VAT records means keeping your VAT account, output tax records, and input tax records in a digital format throughout the period. A spreadsheet that is then manually keyed into a portal does not meet this requirement. Your records must flow digitally from source to submission, which is what MTD-compatible software handles.

To sign up for MTD for VAT, you (or your accountant) do this through your Government Gateway account at gov.uk/register-for-making-tax-digital-for-vat. You will need your VAT registration number and the effective date of registration. Once signed up, HMRC places your VAT record into the MTD system.

Finally, you need MTD-compatible software. This is software built to HMRC's MTD VAT API specification. You authorise it once using an OAuth flow (the software redirects you to HMRC, you log in, and grant permission), and it then has the authority to pull your VAT obligations and submit returns on your behalf.

Every VAT return, regardless of how it is filed, contains the same 9 boxes. Understanding what each box represents helps you review the figures your software has calculated before submitting.

Good MTD software calculates all 9 boxes automatically from your transaction records. Your job is to review them and confirm they look right before submitting.

The process below applies to all MTD-compatible software. The exact screens differ between products, but the underlying steps are the same.

Step 1: Keep digital VAT records throughout the period. This happens automatically if you are using MTD-compatible accounting software, as every sale and purchase is recorded in real time. If you are using bridging software with a spreadsheet, your spreadsheet must be kept digitally and linked to the bridging software without any manual re-keying.

Step 2: Check that your business is signed up for MTD with HMRC. If you have not done this yet, go to gov.uk/register-for-making-tax-digital-for-vat. Your software will not be able to retrieve your VAT obligations or submit returns until MTD sign-up is complete.

Step 3: Authorise your MTD software to connect to HMRC. Most software does this via an OAuth flow the first time you go to submit. You are redirected to HMRC's Government Gateway, you log in, and you grant the software permission to interact with your VAT record. This authorisation lasts for 18 months and then needs to be renewed.

Step 4: Review the 9-box figures your software has calculated. Check that the output VAT (Box 1) looks right for the period's sales, and that the input VAT (Box 4) reflects the purchases you have records for. If a figure looks off, investigate the underlying transactions before submitting.

Step 5: Submit the return through your software. There is usually a 'Submit to HMRC' button or equivalent. Your software sends the 9-box figures to HMRC's API.

Step 6: Receive and save HMRC's confirmation. HMRC sends back a confirmation receipt with a submission reference. Your software should store this automatically. Keep this receipt as proof of submission.

Step 7: Pay any VAT due by the deadline. If Box 5 shows an amount you owe HMRC, payment must be made by the same deadline as the return (1 calendar month and 7 days after the period end). Pay via your HMRC online account or by bank transfer using your VAT registration number as the reference.

For most businesses, VAT periods are quarterly. HMRC assigns one of three stagger groups, which determines which months your VAT periods end in. The submission and payment deadline is always 1 calendar month and 7 days after the end of the VAT period.

Some businesses file monthly, typically to benefit from faster VAT repayments (for example, businesses that regularly reclaim more VAT than they charge). The same deadline rule applies: 1 calendar month and 7 days after the month end.

Missing a deadline is what triggers the points-based penalty system. Keep the dates below to hand.

Once your software has sent the return to HMRC, HMRC processes it and sends back a confirmation. This usually happens within seconds for digital submissions. The confirmation contains a submission reference number, which your software should record automatically. This reference is your proof of submission.

If you owe VAT (Box 5 is positive), you still need to make payment separately. Submitting the return does not trigger automatic payment. You pay through your HMRC online account, via bank transfer (sort code 08-32-00, account number 11963155, reference your 9-digit VAT registration number), or by Direct Debit if you have set one up in advance.

If HMRC owes you a repayment (Box 5 is negative), repayments are usually made within 30 days of the return being received. They are paid to the bank account registered with HMRC. If you have not provided bank details, set them up in your VAT online account to avoid delays.

HMRC may occasionally open an enquiry into a VAT return. If this happens, you will receive a letter. This is separate from the submission process and is not triggered by submitting through MTD.

HMRC introduced a points-based penalty system for late VAT returns from January 2023, replacing the old default surcharge regime. The system works as follows.

Each time you submit a VAT return late, you receive one penalty point. Once your total points reach the threshold for your filing frequency (2 points for annual filers, 4 for quarterly filers, 5 for monthly filers), HMRC charges a fixed £200 penalty. A further £200 penalty is charged for each subsequent late return while you are at the threshold.

Points expire after 24 months if you have no further late returns, or you can reset your points to zero by filing all returns on time for a set period (12 consecutive months for annual filers, 6 months for quarterly, and 6 months for monthly).

Separate to late-return penalties, HMRC charges late-payment penalties and interest on VAT that is paid after the deadline. The penalty rate increases the longer the payment remains overdue. Interest is also charged from the first day the payment is late.

The practical takeaway: file on time even if you cannot pay on time. Late filing and late payment are penalised separately, and filing on time removes the risk of accumulating late-return penalty points.

The most common errors on MTD VAT returns are not unique to digital filing, but MTD makes some of them easier to spot and some harder to miss.

Forgetting to include all income. If you have multiple sales channels (for example, online sales via a marketplace plus direct sales), make sure all income is captured in your digital records before the return is calculated. A return that omits a revenue stream will understate Box 1 and Box 6.

Claiming input VAT without a valid VAT invoice. HMRC can disallow input tax claims if you cannot produce a valid VAT invoice for the purchase. Your software may process a transaction, but the right to reclaim VAT depends on the underlying document.

Submitting before all transactions for the period are recorded. If you have bank transactions or supplier invoices from the last days of the period that have not been processed yet, submitting early can mean the return is incomplete. Review the period-end date and confirm everything is in.

Authorisation gaps. If your software's HMRC connection has lapsed (authorisations last 18 months), your submission will fail. Re-authorise the connection before the deadline, not on the day you try to submit.

Wrong VAT period selected. Especially if you are catching up on late returns, confirm that the period dates on your submission match the HMRC obligation you are fulfilling.

Using the old HMRC online portal. The portal will not accept returns from VAT-registered businesses that are enrolled in MTD. If you try to file this way, it will fail or be rejected. You must file through your MTD software.