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Making Tax Digital and VAT Reporting

This page will explain what Making Tax Digital (MTD) is, and how Avalara VAT reporting can help your business meet all MTD requirements.

What is MTD?

The making tax digital scheme was announced by HMRC in 2015. MTD sets out a vision for an online tax system, aiming to make the process of reporting and administrating taxes quicker and simpler.

What is the timeline for MTD?

MTD will be phased in over the course of a few years, with all tax reporting and submissions being made online from April 1st 2022. 

Some business will already be required to make online submissions and returns, if you are unsure of your current MTD status or want to review the timeline then more information can be found at HMRC online.

What does MTD mean for my business?

The MTD changes mean that UK businesses will be required to file their taxes online, many businesses were already filing online before MTD came into effect. With changes to cloud accounting and the prevalence of the internet many businesses were already in a good position to be MTD compliant. If you need to get started with MTD check out HMRC’s guide for businesses.

MTD and VAT Reporting

VAT Reporting is fully compliant with MTD, this means you can meet your businesses MTD filing requirements using VAT Reporting.

Getting ready for MTD and filing GB VAT

  • Before filing the GB return, the GB VAT number needs to be authenticated with HMRC first.

  • Click on Settings > Companies, then click on View company VAT numbers next to the company that you wish to authorize.

  • Then click on the arrow next to the GB VAT number to open the edit VAT number window.

  • Finally scroll down to the bottom of the details about the VAT number and click on Authenticate VAT number.

  • When you click on authenticate you will be taken to HMRC’s website.

  • click on Continue.

  • Enter your Government Gateway login details to proceed. (if you do not yet have these you will need to register here)

  • When you are logged in you just need to click authenticate VAT number, once this is completed you will not need to do it again for that company. With the number authorized you are ready to file with HMRC.

  • Once you have authenticated head to Returns > Open returns and open the return that needs to be filed.

  • If the numbers are correct and a pdf has already been saved choose Fixed Format as format and click on View Filing.

  • Finally click on Submit VAT Return. This will have now been filed and your MTD requirements are met.

Summary and next steps

Now you know how to get set up for MTD and file VAT returns in VAT Reporting. To learn more about using Avalara VAT Reporting, check out more guides in our Help Centre.


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