Episode 7 – Making Tax Digital: What Every Business Needs to Know

 

What is MTD — and who must follow it

Since April 2019, and from April 2022 for all VAT-registered businesses regardless of turnover, MTD (Making Tax Digital) requires that VAT records be kept digitally and VAT returns submitted through compatible software. GOV.UK+1

That means paper ledgers or ad-hoc spreadsheets no longer satisfy HMRC’s requirements — and must be replaced with software that supports digital record-keeping and API-based return submission. ICAEW+1

Why MTD matters for bookkeepers and small businesses

MTD was introduced to modernise the UK tax system, reduce errors, and make VAT compliance more transparent. Sovos+1

For small businesses and bookkeeping services, this means:

• Regular, accurate bookkeeping becomes mandatory; ad-hoc “catch-up” accounting risks non-compliance.

• You must use software (or bridging software) that connects to HMRC directly — not manually re-typing data. GOV.UK+1

• Digital records must be retained for six years (or 10 years if under VAT MOSS). ICAEW

What businesses should do now to stay compliant

If you haven’t already:

1. Choose a bookkeeping or accounting package approved for MTD. HMRC’s software-finder helps identify eligible products. GOV.UK

2. Start or continue regular bookkeeping — ideally weekly or monthly — so VAT records are always up to date.

3. Submit VAT returns on time via the software API rather than manually via portal.

4. Archive your digital records securely for at least six years.

These steps give clarity, reduce errors, and help avoid penalties or audits.

We offer bookkeeping packages from £129 per month with two months free on annual subscriptions, including bank reconciliation, VAT, PAYE and monthly reports for complete financial clarity. Need help? Email support@bookkeepingpackages.co.uk or visit our site at www.bookkeepingpackages.co.uk.