A Step-by-Step Guide to Becoming MTD Compliant

Making Tax Digital, commonly referred to as MTD, is HMRC’s initiative to modernise the UK tax system. It requires businesses to keep digital records and submit tax returns using compatible software, replacing manual and paper-based processes.

For many businesses, the idea of becoming MTD compliant can feel overwhelming. However, with the right steps in place and the right support, compliance can be straightforward and even beneficial for your operations.

In this guide, we’ll walk you through exactly how to become MTD compliant and explain what you need to do.

Becoming Compliant for Making Tax Digital

Step 1: Confirm Whether MTD Applies to Your Business

Before making any changes, confirm your obligations.

You must comply with MTD for VAT if:

• You are VAT registered
• Your taxable turnover exceeds the VAT threshold
• You submit VAT returns to HMRC

Even if your turnover is below the threshold, voluntary VAT registration may still require MTD compliance.

If you are preparing for future phases of MTD for Income Tax, it is wise to begin digital record keeping early to avoid last-minute changes.

Step 2:Choose HMRC-Recognised MTD Software

MTD compliance cannot be achieved with spreadsheets alone. You must use HMRC-approved software that allows direct digital submission.

When choosing software, ensure it:

• Is officially recognised by HMRC 
• Maintains digital links between data sources
• Integrates with your existing accounting systems
• Allows secure, direct submission of VAT returns

Using incompatible or outdated systems is one of the most common MTD issues businesses face.

At Majors Accounts, we support businesses with selecting and setting up fully compliant MTD software, including our own Majors App solution.

Step 3: Set Up Digital Record Keeping

Digital record keeping is the foundation of MTD compliance.

Under MTD rules, businesses must digitally record:

• Business name and address
• VAT registration number
• Details of supplies made and received
• VAT rates applied
• VAT adjustments

It is important that your systems are digitally linked. Copying and pasting figures between systems breaks HMRC’s digital link requirement and may lead to penalties.

Moving to cloud-based accounting can significantly simplify this process and reduce errors.

Step 4: Sign Up for MTD with HMRC

Once your software is in place and your digital records are set up, you must sign up for MTD through your HMRC account.

This step authorises your chosen software to communicate directly with HMRC.

Many businesses encounter “not authorised” errors because they have not correctly linked their software to HMRC. Ensuring this step is completed properly prevents submission failures and unnecessary delays.

Step 5:Train Your Team and Review Internal Processes

MTD compliance is not just about software. It is about process.

Make sure that:

• Staff responsible for bookkeeping understand digital record requirements
• VAT returns are reviewed before submission
• Built-in validation tools are used
• Deadlines are clearly diarised

The new HMRC points-based penalty system makes timely submissions essential. Filing at the last minute increases the risk of errors or technical issues.

Step 6: Submit Your VAT Return Digitally

• When your VAT period ends:
• Review your figures within your MTD software
• Use built-in checks and validation tools
• Submit directly to HMRC through the system
• Retain digital records for future reference

Avoid manual adjustments outside your software. Everything should remain within the digital ecosystem to maintain compliance.

How Majors Accounts Can Help You Become MTD Compliant

At Majors Accounts, we work with businesses across multiple sectors to ensure smooth and stress-free MTD compliance.

• Our services include:
• MTD software setup and configuration
• Digital record migration
• Ongoing compliance monitoring
• VAT return review and submission support
• Industry-specific guidance, including construction and landlord support

Whether you are just starting your MTD journey or need help resolving compliance issues, our team can provide practical, straightforward advice tailored to your business.

Becoming MTD compliant does not have to be complicated. With the right systems, processes, and expert support, you can meet HMRC requirements confidently while improving your financial management.

If you would like help with MTD compliance, contact Majors Accounts today and let us guide you through the process step by step.