How to File a VAT Return Under MTD: Step-by-Step Guide

The Accounted Business Team·27 February 2026·7 min read

Filing a VAT return under Making Tax Digital does not need to be stressful. If your records are up to date, the actual submission process takes minutes. This guide walks you through every step, from connecting your software to HMRC through to receiving your confirmation.

We will use Accounted as the example, but the general process is similar across MTD-compatible software.

Before You Start

Make sure you have the following:

An active VAT registration with HMRC
A Government Gateway account linked to your VAT registration
MTD-compatible software (such as Accounted) with your bookkeeping records up to date
Your bank transactions categorised and reconciled for the VAT period

The key phrase there is "records up to date." The VAT return itself is generated from your bookkeeping data, so if your transactions are categorised correctly, the return almost writes itself.

Step 1: Connect Your Software to HMRC

If this is your first MTD VAT return, you need to authorise your software to communicate with HMRC on your behalf.

In Accounted, go to Settings > HMRC Connections and select VAT. You will be redirected to the HMRC website where you log in with your Government Gateway credentials. HMRC asks you to confirm that you want to grant Accounted access to submit VAT returns on your behalf.

Click Grant Authority and you will be redirected back to Accounted. This authorisation lasts for 18 months before you need to renew it.

You only need to do this once (or once every 18 months). For subsequent returns, the connection is already in place.

Step 2: Check Your VAT Period

Go to VAT > Returns in Accounted. The software pulls your open VAT obligations directly from HMRC. You will see the current VAT period with its start date, end date and filing deadline.

HMRC sets your VAT periods — they are typically quarterly, though some businesses are on monthly or annual schemes. The dates shown in Accounted match exactly what HMRC has on file for you.

Select the period you want to file.

Step 3: Review Your VAT Summary

Accounted generates a VAT return summary based on your bookkeeping data. This shows the nine boxes that make up a VAT return:

Box 1: VAT due on sales and other outputs
Box 2: VAT due on acquisitions from other EU member states (usually zero post-Brexit for most businesses, though it can still apply in some situations)
Box 3: Total VAT due (Box 1 + Box 2)
Box 4: VAT reclaimed on purchases and other inputs
Box 5: Net VAT to pay or reclaim (Box 3 - Box 4)
Box 6: Total value of sales excluding VAT
Box 7: Total value of purchases excluding VAT
Box 8: Total value of supplies to EU member states (if applicable)
Box 9: Total value of acquisitions from EU member states (if applicable)

The most important figure for most businesses is Box 5. This tells you how much VAT you owe HMRC (or how much HMRC owes you if you are reclaiming more than you charged).

What Penny Checks

Before you see the summary, Penny runs a series of checks on your data. She looks for:

Uncategorised transactions within the VAT period that might affect the figures
Unusual VAT amounts that could indicate a miscategorisation (for example, VAT at 20% on something that should be zero-rated)
Missing receipts for purchases where VAT is being reclaimed
Round number transactions that might need checking (a purchase of exactly £1,000 with no VAT could be correct, or it could mean the VAT was not recorded)
Duplicate transactions that might have been entered twice

If Penny flags anything, you will see warnings on the review screen. Address these before submitting. It is much easier to fix an error now than to submit an incorrect return and correct it later.

Step 4: Drill into the Detail

Do not just look at the summary figures. Click into the detail behind each box to see the individual transactions that make up the totals.

For Box 1, you should see your sales invoices and any other outputs where you charged VAT. Check that the VAT rates look correct — standard rate (20%), reduced rate (5%) and zero rate should all be applied to the right items.

For Box 4, review your purchase invoices and expenses. Make sure you are only reclaiming VAT on legitimate business expenses and that you have receipts or invoices to support the claims.

This review step is where errors get caught. Common mistakes include:

Personal expenses mixed in with business purchases
VAT reclaimed on items that are not VAT-eligible (such as insurance, which is exempt)
Sales to overseas customers charged VAT when they should not have been
Flat rate scheme percentages applied incorrectly

Step 5: Compare with Previous Periods

Accounted shows your current return alongside previous periods. This comparison is genuinely useful. If your Box 1 figure is normally around £3,000 per quarter and this time it is £8,000, that warrants investigation. Maybe you had an unusually good quarter, or maybe something has been miscategorised.

Similarly, if your Box 4 figure (input VAT reclaimed) has jumped significantly, check whether that is because you bought something expensive (a new van, for example) or whether some transactions have been incorrectly coded.

Step 6: Submit to HMRC

Once you are satisfied that the figures are correct, click Submit to HMRC. Accounted sends the nine-box return to HMRC via the MTD API.

The submission happens in real time. Within a few seconds, you will receive a confirmation screen showing:

The HMRC receipt number
The date and time of submission
The figures submitted
The payment due date (if you owe VAT)

Save or print this confirmation for your records. Accounted stores it automatically, so you can always find it under VAT > Returns > [Period].

Step 7: Pay Your VAT

Submitting the return and paying the VAT are two separate steps. HMRC needs to receive payment by the deadline shown on your confirmation (usually one calendar month and seven days after the end of the VAT period).

You can pay HMRC via:

Direct Debit — set this up through your Government Gateway account and HMRC collects automatically about three working days after the deadline
Bank transfer — pay using the bank details shown on your HMRC account, quoting your VAT registration number as the reference
Online banking — through your bank's bill payment service

Direct Debit is the easiest option if you want to avoid the risk of forgetting. Just be aware that HMRC collects on a fixed date, so make sure the funds are available.

If HMRC owes you a refund (Box 5 is negative), the repayment is usually processed within 30 days of submission, though it can sometimes take longer.

Step 8: Reconcile and Move On

After submission, Accounted marks the VAT period as filed. Your books for that period are effectively closed for VAT purposes — though you can still make adjustments if needed (they would appear on the next return).

Run a quick reconciliation: compare the Box 5 figure with the payment you make (or refund you receive) to confirm everything ties up.

Then move on to the next period. Keep categorising transactions, scanning receipts, and reconciling your bank feed. When the next VAT deadline approaches, the process is the same — review, check, submit.

Tips for Easier VAT Returns

Stay on Top of Bookkeeping

The single best thing you can do for painless VAT returns is keep your records current. If Penny is categorising transactions daily and you are scanning receipts as you get them, the quarterly VAT return is just a review and a button press.

Deal with Queries Immediately

If Penny flags a transaction she is not sure about, deal with it now rather than leaving it for VAT return day. A queue of unresolved items at filing time creates unnecessary pressure.

Use the Right VAT Rates

Make sure your products and services have the correct VAT rates assigned. Getting this right at the point of sale or purchase saves time at return stage.

Keep Digital Copies of Invoices

Under MTD, your records must be digital. Accounted's WhatsApp receipt scanning makes this effortless — snap the receipt, send it to Penny, done. For purchase invoices received by email, forward them to your Accounted inbox.

File With Confidence

Filing a VAT return under MTD is straightforward when your bookkeeping is in order. Accounted and Penny handle the data entry, categorisation and error-checking, so by the time you reach the submission screen, you can be confident the figures are right. Start your free trial of Accounted and see how simple VAT returns can be.

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