UK Making Tax Digital (MTD) for E-Commerce Sellers: Requirements & Deadlines
Updated 2026-08-03
UK Making Tax Digital (MTD) for VAT requires all VAT-registered businesses, including e-commerce sellers, to maintain digital records and submit VAT returns using MTD-compatible software. Since April 2022, this applies to all VAT-registered businesses regardless of turnover. Sellers must use approved software like Xero, QuickBooks, or FreeAgent to file quarterly VAT returns digitally with HMRC.
Primary sources
This page is grounded in the primary materials below. Rules change, so open the source and confirm the current version before acting.
FAQ
What is Making Tax Digital for VAT?+
Making Tax Digital (MTD) is HMRC's initiative to digitize the UK tax system. For VAT, it requires all VAT-registered businesses to keep digital records and submit VAT returns using MTD-compatible software. Paper records and manual HMRC portal submissions are no longer accepted.
Do non-UK e-commerce sellers need to comply with MTD?+
Yes, if you are registered for UK VAT (which is required if you sell goods stored in the UK or sell to UK consumers above the threshold), you must comply with MTD requirements regardless of where your business is based. Overseas sellers using Amazon FBA UK must register for VAT and file MTD-compliant returns.
What software is MTD-compatible?+
Popular MTD-compatible software includes Xero, QuickBooks, Sage, FreeAgent, and Kashflow. HMRC maintains a list of approved software on their website. For sellers using spreadsheets, bridging software like BTCSoftware or TaxCalc can connect spreadsheet records to HMRC's MTD system.
What are the penalties for not complying with MTD?+
HMRC can charge a points-based late submission penalty system introduced in January 2023. Each late submission earns a penalty point, and once you reach the threshold (typically 4 points for quarterly filers), a £200 fine is charged for each subsequent late submission. HMRC may also charge interest on late payments.
How often do I file MTD VAT returns?+
Most businesses file quarterly VAT returns, due 1 month and 7 days after the end of each VAT quarter. Annual accounting scheme filers file once a year. Monthly filing is required for businesses on the payment on account scheme. Your VAT registration determines your filing periods.
Can I use Amazon's VAT calculation service with MTD?+
Amazon's VAT Calculation Service (VCS) provides VAT invoices and calculates VAT on transactions, but it does not directly file MTD returns. You still need MTD-compatible software to prepare and submit your VAT returns to HMRC. VCS data can be imported into your accounting software to simplify record-keeping.
Continue checking
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