--- title: Making tax digital for VAT description: Making Tax Digital for VAT (MTD), is the first stage in the wider process of modernising the current tax system, from 1 April 2019 Making Tax Digital will be compulsory for VAT registered businesses. image: https://blog.shorts.uk.com/hubfs/Stock%20images/Woman%20using%20Xero%20on%20laptop%20to%20make%20her%20VAT%20digital%20.jpeg --- [![Shorts_logo_White](https://blog.shorts.uk.com/hubfs/New%20Site%202018/Shorts_logo_White.svg "Shorts_logo_White")](https://www.shorts.uk.com/) [Blogs & News](https://blog.shorts.uk.com/) > [Xero](https://blog.shorts.uk.com/topic/xero) # Making tax digital for VAT Alicia Williams - 5 April 2018 ###### Select topic - Please Select - [ Audit ](https://blog.shorts.uk.com/topic/audit) [ Business Taxes ](https://blog.shorts.uk.com/topic/business-taxes) [ Radius – R&D Tax Relief & Patent Box ](https://blog.shorts.uk.com/topic/radius-rd-tax-relief-patent-box) [ Corporate Finance ](https://blog.shorts.uk.com/topic/corporate-finance) [ GENUS Management Accounts ](https://blog.shorts.uk.com/topic/genus-management-accounts) [ VAT ](https://blog.shorts.uk.com/topic/vat) [ Private Client ](https://blog.shorts.uk.com/topic/private-client) [ Payroll ](https://blog.shorts.uk.com/topic/payroll) [ EOT ](https://blog.shorts.uk.com/topic/eot) [ International Taxes ](https://blog.shorts.uk.com/topic/international-taxes) ![featured image](https://blog.shorts.uk.com/hubfs/Stock%20images/Woman%20using%20Xero%20on%20laptop%20to%20make%20her%20VAT%20digital%20.jpeg) ###### **What is Making Tax Digital?** ###### Making Tax Digital (MTD), in particular MTD for VAT, is the first stage in the wider process of modernising the current tax system.  ###### MTD will be compulsory for VAT registered businesses from 1 April 2019 and will introduce the requirement for businesses to keep their VAT records digitally and submit VAT returns using functional compatible software.    **MTD Compliance: Functional Compatible Software** Essentially, MTD functional compatible software is software that allows businesses to record and preserve the digital records as mentioned above in an electronic format and to submit and receive information directly to HM Revenue & Customs (HMRC). Although still in draft format, this legislation will be in effect for most businesses from 1 April 2019 and, with less than a year to go, it is now more important than ever to think about your current accountancy software. The following software providers have confirmed that by 1 April 2019 their software will be MTD compliant: - Xero - Quickbooks - Sage (v24) But please note that Sage will not be updating earlier versions of the software to be MTD compliant and as of 15.02.18 have closed the facility to make HMRC submissions directly from earlier versions of the software.   **The Silver Lining**  Admittedly, when we first heard about MTD the biggest worry seemed to be the extra administration this would mean for clients, but actually this has been a blessing in disguise. Accountancy software developers grasped the opportunity to become creative and developed some fantastic software; - add-ons which really do make book-keeping quicker - Smartphone apps that input data directly into accountancy software from just a picture - access to accounting records remotely - software that learns how to correctly allocate expenses based on your previous activity - using secure online banking connections to recognise income in real time.  Gone are the days of manual double entry and bank reconciliations, here are a few of our favourite software add-ons and apps: Xero accounting software is a very intuitive and useful accounting package.  It automates many of the time-consuming tasks.  For example, it links directly to your bank and post transactions straight into your accounts and suggest the entries to match it to.  This makes you information live, you know exact what you ow and what you are owed.  It also emails out sales invoices and tracks if they have been received, opening and printed.  You can add a pay now button to ensure you get paid faster. Xero costs between £10-27per month for unlimited users and you are not tied into a annual contract, this also includes support. Xero’s real power is in its add on market place.  Much like Apple it has over 600+ accounting and industry specific add-ons.  As Platinum Xero Partners we have a dedicated team who focus on ensuring you get the best apps to make your business more efficient and to enable you to grow.  One of our favourite add-ons is Auto-Entry which scans your purchase invoices, reads them and creates the accounts entry for your Xero accounting software and then attaches a picture to the line in your accounts.  What’s more these images are tax documents, which mean you no longer need to keep the paper copies.  The cost is minimal on a few pence per invoice with no tie in.   **MTD Compliance - the records that will need to be kept digitally**  HMRC recently issued guidance on this. **MTD Compliance: Digital Record Keeping** Under MTD, certain VAT records will be required to kept digitally: Information about your business: Your business name: - The address of your principle place of business - Your VAT registration number - A record of any VAT accounting schemes that you use Information about your sales: - Invoice date - Value - Rate of VAT applied Information about your purchases: - Invoice date - Value - Amount of VAT claimed   To learn more about how these changes will affect your business please contact Tim Baum-Dixon on 0114 2671617 or click here to arrange your [free consultation.](https://info.shorts.uk.com/xero-projects-team)    [![Your free consultation](https://no-cache.hubspot.com/cta/default/2442072/3b02d41f-8fc4-48e5-8225-3b1d76ef6e50.png)](https://cta-redirect.hubspot.com/cta/redirect/2442072/3b02d41f-8fc4-48e5-8225-3b1d76ef6e50)    Other related links: - [Transfer of Going Concern and option to tax ](https://blog.shorts.uk.com/transfer-of-a-going-concern-togc-and-option-to-tax) - [What is VAT? - a Guide to Value Added Tax](https://blog.shorts.uk.com/what-is-vat) - [Top 7 commonly made VAT errors ](https://blog.shorts.uk.com/top-7-commonly-made-vat-errors) - [VAT on E-Books](https://blog.shorts.uk.com/vat-on-e-books)   ![author](https://blog.shorts.uk.com/hubfs/Alicia%20williams-1.jpg) #### Alicia Williams I am Partner of the Genus team at Shorts, a chartered certified accountant and Xero specialist. I specialise in cloud-based accounting solutions, particularly Xero and add-on software, helping clients streamline processes and improve efficiency. As a Client FD, I work closely with businesses to give them a clear understanding of their current position and support their long-term planning and growth. [View my articles](https://blog.shorts.uk.com/author/alicia-williams) Tags: [Xero](https://blog.shorts.uk.com/topic/xero), [GENUS Management Accounts](https://blog.shorts.uk.com/topic/genus-management-accounts), [VAT](https://blog.shorts.uk.com/topic/vat), [Accountancy Services](https://blog.shorts.uk.com/topic/accountancy-services), [Business Taxes](https://blog.shorts.uk.com/topic/business-taxes), [Making Tax Digital](https://blog.shorts.uk.com/topic/making-tax-digital) Share this on - - - [Questions? Get in touch with us](https://www.shorts.uk.com/contact/) ###### Tax Saving Guide 2026-27 Written especially for entrepreneurs and owner-managed businesses, this guide is full of planning ideas and tax risks to avoid. [ Download now ](https://info.shorts.uk.com/en-gb/tax-saving-guide) ![Tax saving guide 2026-27](https://blog.shorts.uk.com/hs-fs/hubfs/Tax%20saving%20guide%202024.jpg?width=375&height=465&name=Tax%20saving%20guide%202024.jpg) ###### Related articles ##### [MTD and VAT: Making Tax Digital in 2026](https://blog.shorts.uk.com/mtd-and-vat-making-tax-digital) ##### [MTD for Income Tax: how your accountant can help](https://blog.shorts.uk.com/mtd-for-income-tax-how-your-accountant-can-help) ##### [Making Tax Digital for Income Tax (MTD for ITSA)](https://blog.shorts.uk.com/making-tax-digital-mtd-for-income-tax) ##### [Understanding the eligibility thresholds and exemptions for MTD ITSA](https://blog.shorts.uk.com/understanding-the-eligibility-thresholds-and-exemptions-for-mtd-itsa) ###### Latest articles [Should UK business owners reconsider exit timing?](https://blog.shorts.uk.com/uk-business-owners-reconsider-exit-timing) [Xerocon 2026: Innovation, inspiration and a look at the future](https://blog.shorts.uk.com/xerocon-2026-innovation-inspiration-and-a-look-at-the-future) [Salary sacrifice pension changes 2029: what you need to know](https://blog.shorts.uk.com/salary-sacrifice-pension-changes-2029) [How to separate a business through a demerger](https://blog.shorts.uk.com/how-to-separate-a-business-through-a-demerger) [A case of aggressive tax avoidance: Glasgow Rangers Football Club](https://blog.shorts.uk.com/aggressive-tax-avoidance-affect-you) [What is VAT? - Complete Guide (Updated for 2025/26)](https://blog.shorts.uk.com/what-is-vat) [Ashgate Hospice Sparkle Night Walk 2026](https://blog.shorts.uk.com/ashgate-hospice-sparkle-night-walk-2026) [Stocktaking guide for UK businesses](https://blog.shorts.uk.com/stocktaking-guide-for-uk-businesses) [Supporting the Chatsworth Cascade for future generations](https://blog.shorts.uk.com/supporting-the-chatsworth-cascade-for-future-generations) [Deal of the Year win at Insider Dealmakers Awards 2026](https://blog.shorts.uk.com/deal-of-the-year-win-at-insider-dealmakers-awards-2026) #### About Us Use this little footer to reinforce your message about who you are and why people love working with you. 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