Making Tax Digital for VAT has been mandatory since April 2022 for every VAT-registered business in the UK, regardless of turnover. The requirement is precise: VAT records must be kept digitally, and the VAT return must be submitted via a recognised software product over a digital link to HMRC's API. Spreadsheet-bridging tools satisfy the technical requirement but make the audit trail brittle. 4invoices is the one digital system — your invoices are your VAT records, and submission is a button.
Working out which sales go in which VAT box
Box 1 (VAT on sales) comes from invoices marked standard, reduced or zero-rate. Box 4 (VAT reclaimed on purchases) comes from purchase records marked recoverable. Box 6 (total sales) and Box 7 (total purchases) need conversion of foreign-currency sales to GBP using the period-average or issue-date rate. We compute all nine boxes from the underlying records — no spreadsheet, no manual reclassification.
Sole director taking salary plus dividend — mixed-treatment scenarios
If you're a sole-director Personal Service Company, your salary is PAYE (not in the VAT return), dividends are not invoices, and only your invoiced fees go in Box 1 / Box 6. Easy to confuse if you're managing it manually. 4invoices keeps the categories distinct and feeds only invoice income into the VAT return.
Year-end submission timing — last day of the month
VAT returns are due one month and seven days after the period end. For a quarter ending 31 March, the return is due 7 May. Easy to miss when you're busy. The dashboard shows the next due date prominently from the start of the period; we pre-prepare the return at quarter-end and email you when it's ready for review and submission. Two clicks from email to HMRC.
How MTD VAT works at 4invoices
Connect your business to HMRC once. The connection uses HMRC's MTD VAT API with OAuth authentication — we never see your Government Gateway password, only the access token HMRC issues directly to the connection. The token lasts 18 months; renewal is one click from a dashboard prompt.
Throughout the period, every invoice you issue gets the right VAT treatment per line — standard 20%, reduced 5% (domestic energy, child car seats, sanitary products, mobility aids), zero-rate (food, books, children's clothes, public transport, exports), exempt (financial services, insurance, education, healthcare). Purchase records are added either manually (upload a supplier invoice) or via bank feed (we recognise common suppliers and pre-categorise the VAT). Each transaction has its tax point set correctly — supply date for goods, payment date for services unless invoiced earlier.
At quarter-end, the system runs through every transaction in the period and computes the nine boxes of the VAT return. Box 1 is VAT on sales (the sum of VAT lines on issued invoices). Box 2 is acquisitions from Northern Ireland (rare for most businesses). Box 3 is the total of 1 and 2. Box 4 is recoverable input VAT on purchases. Box 5 is the net VAT payable (Box 3 minus 4). Box 6 is total sales ex-VAT including zero-rated and exempt. Box 7 is total purchases ex-VAT. Box 8 is goods supplied to Northern Ireland. Box 9 is goods acquired from Northern Ireland.
The return is presented in a review screen — every figure with the underlying invoices and purchases one click away. When you're satisfied, you press Submit. The submission goes via the MTD VAT API; HMRC returns a submission receipt with a reference number and the accepted figures. Both are stored against the period in 4invoices for 6 years (the HMRC record-keeping minimum).
Frequently asked
What if I made a mistake on a previously submitted return?
HMRC allows error corrections under £10,000 net VAT to be carried forward into the next return. Larger errors need a separate VAT 652 form. 4invoices flags the discrepancy when you reconcile and supports both the carry-forward and the VAT 652 path.
Can my accountant access the VAT data for review?
Yes. Invite your accountant as a user with View/Review permission. They can see all invoices, purchases and the pre-prepared return. Submission requires Admin permission, so you stay in control of the actual filing.
What about MTD for Income Tax (MTD ITSA)?
MTD ITSA applies to sole traders and landlords with turnover over £50,000 from April 2026 (over £30,000 from April 2027). Quarterly updates plus year-end finalisation will follow the same pattern as MTD VAT. Support is on our 2026 roadmap — when HMRC publishes the production API, we'll connect.
Switch your VAT submissions to digital today
Free trial. Connect to HMRC sandbox first if you want to test the submission flow without affecting your live records.