HMRC research demonstrates wider digitalisation benefits of Making Tax Digital for VAT initiative for micro-businesses
The UK’s Making Tax Digital for VAT regime, introduced between 2019 and 2022, has demonstrated wider advantages for taxpayers according to HRMC research. The focus of the report was for small businesses under the £85,000 VAT registration threshold who had nevertheless opted to voluntarily register for VAT. These taxpayers were obliged to comply with the MTD for VAT rules, too.
MTD requires businesses to keep digital records for VAT and submit returns to HMRC using compatible software, by either bridging software or fully functional MTD software.
More than 30% of companies surveyed reported that they had adopted wider digitalisation in their accounts prompted by MTD. 58% said they had experienced faster completion of VAT returns, and 47% said there was a reduction in the effort it takes to deal with VAT. some businesses also experienced ‘soft’ benefits that are less tangible, such as digital and financial confidence and in their relationship with HMRC.
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Read more in our UK VAT country guide.
