Can you still submit a VAT return without software?

For most VAT-registered businesses, the answer is no. Under Making Tax Digital (MTD) for VAT, you must keep digital records and send your VAT return to HMRC through compatible software. Typing your figures into the old form in your VAT online account is no longer allowed for most businesses, and a paper return can lead to a penalty.

There are a few exceptions, and "software" covers more than you might expect. Here are the rules, who's exempt, how to apply, and what to do if you have no software yet.

The short answer

GOV.UK puts it plainly: "You must submit your VAT Return using accounting software that's compatible with Making Tax Digital" (GOV.UK: How to send your VAT Return).

You can only send a return by post or through your VAT online account if:

• HMRC has confirmed you're exempt from MTD for VAT
• your business is subject to an insolvency procedure
• you're sending your final return after cancelling your VAT registration

(GOV.UK: How to send VAT Returns when exempt from MTD for VAT)

These rules apply whatever your turnover. Since 1 April 2022, VAT-registered businesses with taxable turnover below the VAT registration threshold (currently £90,000) have also had to follow MTD rules (GOV.UK: Applying for an exemption from MTD for VAT). That includes businesses that registered voluntarily.

What happened to the old VAT return form?

Many business owners remember typing their nine boxes straight into HMRC's website. HMRC closed that route for most businesses: from 1 November 2022, you can no longer use your VAT online account to send quarterly or monthly VAT returns (GOV.UK: Applying for an exemption from MTD for VAT).

Your VAT online account (also called your business tax account) still matters. You use it to see when returns are due, when payment must clear, to check that HMRC has received your return, and to update your details (GOV.UK: Sending a VAT Return).

The online form is still used in some cases:

• Exempt businesses, if HMRC's exemption letter tells them to file online
• Deregistered businesses sending their final return, because MTD software can't be used once you're no longer VAT-registered
• Businesses with a Company Voluntary Arrangement or Individual Voluntary Arrangement, which can choose between paper and the online account

(GOV.UK)

All VAT-registered businesses should now be signed up for MTD for VAT. HMRC signed up the remaining businesses automatically, so you don't need to do it yourself (GOV.UK).

What counts as "software" under MTD?

HMRC's rules are more flexible than "buy an expensive accounting package". VAT Notice 700/22 says your software, or set of linked software, must be able to:

• keep and maintain the digital records the rules require
• prepare your VAT return from those records
• talk to HMRC through its API (application programming interface)

That can be done with:

Accounting software

A single product that keeps your records and files your return. This is the simplest route.

Bridging software

A tool that connects non-compatible software, such as a spreadsheet, to HMRC so the figures can be sent digitally (GOV.UK: Find software that's compatible with MTD for VAT).

API-enabled spreadsheets

Spreadsheets that include the MTD APIs and can either submit directly or work alongside accounting software (VAT Notice 700/22, paragraph 3.2.3.1).

The "digital links" rule

If your records pass between more than one program, the transfers must be digital links. Examples include formulas linking spreadsheet cells, CSV or XML import and export, file upload and download, or an API connection. HMRC says it does not treat "cut and paste" or "copy and paste" as a digital link, and you can't copy figures by hand from one part of your system to another (VAT Notice 700/22, paragraph 3.2.1).

So a spreadsheet on its own isn't enough to file, but a spreadsheet plus suitable bridging software can be.

Who can get an exemption from MTD for VAT?

Automatic exemptions (no application needed)

You're already exempt if:

• you or your business are subject to an insolvency procedure
• you've cancelled your VAT registration and are sending your final return

(GOV.UK: Applying for an exemption)

Exemptions you apply for, including digital exclusion

You can apply if it's not reasonable or practical for you to use computers, software or the internet. HMRC says this could be because of:

• your age, health condition, disability or where you live
• a religious objection to using computers
• having no access to the internet

HMRC says it will also consider other reasons (GOV.UK).

What probably won't qualify

VAT Notice 700/22 (section 2.2) gives some useful examples. You might not be exempt if:

• you rely on age alone. HMRC looks at how your age and circumstances actually affect you.
• you're simply unfamiliar with software. HMRC considers how much you already use digital devices and whether it's reasonable for you to learn.
• you claim a religious objection but already file online or use a computer for other business or personal purposes.

HMRC also says you won't get an exemption solely because of the extra effort, time or cost of moving to MTD, such as buying new hardware or software or learning to use it, where it considers that reasonable. It does take that into account in its overall assessment.

How to apply for an exemption

According to GOV.UK, you must call or write to HMRC. You'll need:

1. your VAT registration number
2. your business name and address
3. details of how you currently send your return
4. the reason you think you're exempt
5. authorisation from the business, if you're applying on someone else's behalf

(GOV.UK: Applying for an exemption)

Contact details are on HMRC's VAT: general enquiries page. Keep sending your returns the way you currently do until HMRC writes to you with its decision. If HMRC agrees you're exempt, the letter will tell you whether to send a paper return or use your VAT online account.

If you're told to use paper, HMRC sends you the forms. If one doesn't arrive or you lose it, contact the VAT helpline straight away for a replacement. The return must reach HMRC by the due date (GOV.UK).

Penalties for not using software

• Paper return when you're not exempt: HMRC can charge a penalty of up to £400 (GOV.UK: How to send your VAT Return).
• Late returns: if not having software means you miss the deadline, you'll get a late submission penalty point. Quarterly filers reach the threshold at 4 points, which brings a £200 penalty, and another £200 for every further late return while at the threshold. This applies to nil and repayment returns too (GOV.UK: Penalty points for late VAT Returns).
• Late payment: your VAT payment is normally due one calendar month and 7 days after the period ends, the same as the return. Paying late can bring separate penalties and interest (GOV.UK: Sending a VAT Return).

No software yet? What to do now

1. Check your deadline in your VAT online account.
2. Choose a product. HMRC's software finder lists products that have been through its recognition process. HMRC doesn't recommend one over another and notes that most require payment, though some free versions are available.
3. Connect it to HMRC. You grant the software authority to act for you, which lasts 18 months and can be checked or withdrawn at any time (same GOV.UK page).
4. Get your records in digitally, then check the nine boxes and submit.
5. If you genuinely can't use digital tools, apply for an exemption rather than sending a paper return.

Keep digital records and file VAT returns: free, no limit

Munshian Ledger is online accounting software for UK sole traders and limited companies, and it's free, no limit. You keep your invoices, bills and bank transactions in it (bank statements import as CSV, OFX or QIF files). It connects to HMRC through Making Tax Digital, shows the VAT periods HMRC is expecting from you with their deadlines, works out the nine boxes from your records and submits the return. Every submission is stored with HMRC's receipt.

A few things to know before you start. Munshian Ledger calculates returns under the standard VAT scheme (invoice basis). It isn't a spreadsheet bridging tool, so it works best if you're happy to keep your records in it. It's free, no limit: start in minutes, with no card and no contract.

Create your free Munshian Ledger account →

If you're an accountant or bookkeeper

Agents need MTD software too. HMRC's steps are: get compatible software, create an agent services account (different from your HMRC online services for agents account), ask each client to authorise you with a "digital handshake" link, then authorise your software before sending returns (GOV.UK). Munshian VAT lets practices file MTD VAT returns for many clients in bulk: free, no limit. Start free bulk VAT filing in minutes, no card →

Frequently asked questions

Can I still submit my VAT return on the HMRC website?

Not normally. From 1 November 2022, the VAT online account can't be used to send quarterly or monthly returns unless you're exempt, in certain insolvency arrangements, or sending a final return after deregistering (GOV.UK).

Can I submit my VAT return myself without an accountant?

Yes. You don't need an accountant, but you do need MTD-compatible software (or bridging software) unless you're exempt (GOV.UK).

Does MTD for VAT apply if my turnover is under £90,000?

Yes. Since 1 April 2022, businesses that are VAT-registered but below the threshold must also follow MTD rules (GOV.UK).

Can I keep using spreadsheets?

Yes, if you pair them with bridging software or use an API-enabled spreadsheet, and the data moves through digital links rather than copy and paste (VAT Notice 700/22).

How do I apply for an MTD exemption?

Call or write to HMRC with your VAT number, business details, how you currently file and why you think you're exempt. Keep filing as normal until HMRC replies (GOV.UK).

What's the penalty for sending a paper VAT return?

Up to £400 if you're not exempt (GOV.UK).