25 Apr 2023HMRC has urged all VAT registered businesses to use Making Tax Digital for VAT (MTD for VAT) compatible software to keep VAT records digitally and file VAT returns. From 15 May 2023, businesses that file VAT returns annually will no longer be able to use their VAT online account and instead must use compatible software to file future VAT returns. HMRC said that businesses that fail to do so may have to pay a penalty. If a business is already exempt from filing VAT returns online or if it is subject to an insolvency procedure, it is automatically exempt. Business owners can apply for an exemption if it's not reasonable or practical for them to use computers, software or the internet to follow the MTD for VAT rules. Information on compatible software and how to submit VAT returns under the MTD for VAT initiative can be found here.