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Registration and Setup Process for Making Tax Digital (MTD) for Corporation Tax

As businesses transition towards a more digital world, HMRC’s Making Tax Digital (MTD) for corporation tax is now a necessity. This article offers an easy guide to registering for MTD and setting up your corporation to comply with MTD regulations. Worthwhile for any corporation looking to keep pace with the digital tax revolution.

Understanding Making Tax Digital (MTD)

HMRC’s MTD is a UK government initiative that aims to revolutionise the UK tax system and make it easier for individuals and businesses to get their taxes right. It requires businesses, self-employed individuals, and landlords with taxable turnover above the VAT threshold to keep digital records and use software to submit VAT returns.

The MTD for VAT initiative, introduced in April 2019, has been successfully implemented for VAT-registered businesses. Now, the government has turned its focus to Making Tax Digital for corporation tax, extending the mandate of MTD to include businesses with corporation tax obligations.

Who Should Register for MTD and When?

Businesses that exceed the VAT threshold should register for MTD, including the self-employed and landlords. HMRC has already implemented MTD for VAT in 2019. From 2022, businesses must also register for MTD for corporation tax. 

Registration should be completed according to HMRC’s timeline to avoid potential penalties. While the exact deadlines will depend on your VAT period, it’s recommended that businesses register for MTD at least 72 hours before their first VAT return is due.

How to Register for Making Tax Digital

To register for MTD, follow these simple steps:
    1. Sign up for MTD on the HMRC website using your Government Gateway account for your business.
    2. After signing up, you will receive an email confirmation from HMRC within 72 hours. Only submit your VAT return once you’ve received this confirmation.
    3. Once you receive the confirmation, you can submit your VAT returns using MTD-compatible software.

Choosing the Right MTD-Compatible Software

You are choosing the right digital software to manage and submit your tax returns. Your chosen software must interact with HMRC’s systems, allowing you to keep digital records, submit VAT returns, and view liabilities and payments. 

Many accounting software providers offer MTD-compatible software. Businesses already using compatible accounting software must sign into their online account and authorise it to interact with HMRC.

Do You Need an Accountant for MTD?

An accountant can be a valuable asset when transitioning to MTD. They can advise which MTD-compatible software to use and assist with setting up and maintaining digital records. Accountants can also ensure your business is MTD-compliant and help you understand and navigate the requirements of MTD.

Key Points to Remember

  • MTD is a government initiative that requires businesses and self-employed individuals to keep digital records and submit tax returns digitally.
  • Businesses should register for MTD for corporation tax in 2026.
  • Registration for MTD is done through the HMRC website, and businesses must receive a confirmation email before submitting their VAT return.
  • Choosing the right MTD-compatible software is crucial for compliance.
  • Accountants can provide valuable assistance during the transition to MTD
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The Making Tax Digital initiative started in April 2019 for VAT. The timeline for other taxes may vary, and it’s best to check the latest updates from HMRC.

To comply with Making Tax Digital, you need to keep digital records and use software to submit your VAT returns. If you are not already doing this, you will need to sign up.

There are many software solutions that are compatible with Making Tax Digital. HMRC provides a list of Making Tax Digital compatible software on their website.

HMRC has a points-based penalty system for late submission and payment. If you miss a deadline, you will receive a point. Once points reach a certain threshold, you will be penalized.

No, if your business is above the VAT threshold, you cannot opt out of Making Tax Digital. However, there are certain exemptions based on disability, age, remoteness of location, or religious beliefs.

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