Making Tax Digital
Making Tax Digital for VAT software
Every VAT-registered business must keep its VAT records digitally and send its VAT returns using compatible software. PactTax keeps your records from your bank feed and prepares your nine-box VAT return from them.
Who Making Tax Digital for VAT applies to
It applies to all VAT-registered businesses. Businesses over the VAT threshold have followed it for VAT periods starting on or after 1 April 2019. Businesses under the threshold joined from their first VAT period starting on or after 1 April 2022.
HMRC signs businesses up automatically, so you do not need to do it yourself. You may not need to follow the rules if HMRC agrees that it is not practical for you to use digital tools, or if you are insolvent. You must apply to HMRC for an exemption.
Digital records and digital links
Some VAT records must be kept digitally, in compatible software. They include your business details, the supplies you make, the supplies you receive, and summary data for each VAT period.
If you use more than one piece of software, the data must move between them by a digital link: a transfer made electronically.
- Linked cells in a spreadsheet, importing and exporting XML or CSV files, and transfers by API are digital links.
- Copying and pasting, or typing figures from one program into another, is not.
Bridging software or full software
Full record-keeping software keeps your digital records and sends your VAT returns. Bridging software connects software that cannot talk to HMRC, such as a spreadsheet, to HMRC's systems.
Either way, any data that moves between programs must move by a digital link.
The nine-box VAT return
A VAT return has nine boxes:
- Box 1: VAT due on your sales and other outputs
- Box 2: VAT due on goods brought into Northern Ireland from EU member states
- Box 3: total VAT due (boxes 1 and 2 added together)
- Box 4: VAT you can reclaim on purchases and other inputs
- Box 5: the net VAT to pay HMRC or reclaim (box 3 minus box 4)
- Box 6: total value of sales and other outputs, excluding VAT
- Box 7: total value of purchases and other inputs, excluding VAT
- Box 8: total value of goods supplied to EU member states, excluding VAT
- Box 9: total value of acquisitions from EU member states, excluding VAT
If you are unsure what goes in a box, ask a qualified accountant or tax adviser.
VAT return deadlines
The deadline for submitting your VAT return online is usually one calendar month and 7 days after the end of the VAT period. That is also the deadline for your payment to reach HMRC, so allow time for it to clear. The Annual Accounting Scheme has different deadlines.
For Income Tax dates, see Making Tax Digital deadlines.
How PactTax helps
- Your bank feed brings in each transaction, and you confirm its category. Your digital records are kept as you go.
- Invoices you send and bills you record are part of the same records, so nothing is copied by hand.
- Your nine-box return is worked out from your records and shown line by line, ready to check.
- Each VAT deadline sits with your other dates, so you can see what is due next.
PactTax prepares your VAT returns from your records for you to check. Sending them to HMRC from PactTax is not available yet.
Sources
The rules on this page come from GOV.UK. This is general guidance, not advice for your situation: for a judgement call, ask a qualified accountant or tax adviser.
- VAT Notice 700/22: Making Tax Digital for VAT (GOV.UK, updated 1 April 2022)
- Extension of Making Tax Digital for VAT (GOV.UK, updated 7 September 2021)
- Find software that's compatible with Making Tax Digital for VAT (GOV.UK, updated 1 May 2025)
- How to fill in and submit your VAT Return (VAT Notice 700/12) (GOV.UK, updated 19 December 2025)
- Submit a VAT Return (GOV.UK)
Last reviewed 20 October 2026.
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