Making Tax Digital for VAT has reached the stage where there is nothing left to sign up for - and that fact itself still catches businesses out. All VAT-registered businesses are now inside the regime, and HMRC automatically signs up every newly VAT-registered business unless it is already exempt or has applied for exemption. The compliance question is no longer “have we registered?” but “are we actually keeping and filing the way the rules require?”
The core obligations are two: keep VAT records digitally, and submit VAT Returns using software compatible with Making Tax Digital. Compatible software is not a vague aspiration - HMRC publishes a list of products that connect to its systems, spanning everything from full accounting packages to bridging tools that file from spreadsheets.
The digital-records requirement is where inspections find the gaps. The regime expects the journey from transaction to VAT Return figure to run through digital links - data moving between systems without manual re-keying or copy-and-paste in the chain. A traffic office that keeps sales in one system, exports a CSV, and retypes totals into a spreadsheet before filing has a broken digital link, even if every number is right. The fix is usually process design rather than new software: connect the tools, or use one that does the whole job.
For agents filing on clients’ behalf, the plumbing is an agent services account, with software authorised against it - relevant to any accountant handling an operator’s VAT, and worth confirming when the engagement starts rather than at the first deadline.
Some businesses can apply for exemption from Making Tax Digital for VAT, and HMRC’s guidance covers that route. But exemption is for genuine inability - the guidance treats it as a status to be justified, and everyone else is in by default. A business that simply dislikes software is not exempt; a business that cannot reasonably use it may be.
Transport businesses are rarely tripped by the headline rules - most use some accounting package - but the industry’s shape creates specific traps. Owner-drivers who registered for VAT years after MTD began sometimes assume a manual sign-up step still exists; it does not, they are in already. Operators with agency drivers, subcontractors and fuel cards have transaction flows that cross systems, which is exactly where digital links break. And businesses that changed accountant or software mid-year should confirm the VAT connection followed them - an orphaned authorisation means the return does not file, and the first sign is a penalty notice.
The practical checklist is short. Confirm the business is filing through listed compatible software. Trace the data path from invoices and fuel records to the return and remove any re-keying. If an agent files, confirm their agent services account is properly linked. And if the business genuinely cannot operate digitally, apply for exemption properly rather than quietly ignoring the rules - an unapproved paper return in 2026 is a penalty position, not a preference.
Two documents anchor the regime in practice. VAT Notice 700/22 is the detailed rulebook - the notice that spells out what counts as a digital record, how digital links must work and what the software must do. Alongside it sits HMRC’s finder tool for compatible software, kept current as products are certified and retired; the same finder serves both businesses choosing their own package and agents checking what a client already uses. For agents, the plumbing runs through an agent services account: apply for one, sign in, and manage each client’s details against it. A transport business whose accountant files its VAT should be able to name the software doing the filing and confirm the agent link is live.
Exemption, for the few who genuinely need it, is a formal application rather than a quiet opt-out - HMRC publishes dedicated guidance on applying, and until an exemption is granted the default assumption is that the business is inside the regime and filing digitally. For owner-drivers and small operators, the universal-net point is the one to internalise: there is no turnover test to hide behind and no registration letter to wait for. VAT registration and MTD enrolment now arrive together, so the day a business crosses into VAT it is also inside the digital record-keeping rules - which makes choosing the software part of the VAT registration decision, not a later project. Operators who registered before the change and never reviewed their setup should assume the rules apply to them and audit accordingly: the spreadsheets are allowed to stay, but only when a bridging tool files from them and the digital links hold.