Making Tax Digital (MTD) is a fundamental change to the administration of the UK tax system that affects how businesses maintain their accounting and tax records and how they transact and communicate with HMRC.
MTD makes it mandatory for VAT-registered businesses above the £85k threshold to keep records and submit VAT returns digitally using HMRC-recognised software.
Records must be kept digitally which means either using MTD-approved accounting software, or spreadsheets that are compatible with accounting software APIs, to facilitate the data to flow from the business to HMRC (and vice versa).