Can I use Making Tax Digital software just for VAT?

Can I use Making Tax Digital software just for VAT?

If you’ve been told you “need Making Tax Digital (MTD) software,” it’s easy to assume that means you must overhaul your whole bookkeeping setup, file everything through a new platform, and maybe even switch accountants. In practice, many UK businesses only come across MTD because of one tax in particular: VAT. So it’s completely natural to ask a focused question: can you use MTD software just for VAT, and keep everything else as it is?

In most real-world situations, yes: you can use MTD-compatible software purely to meet your VAT filing obligations, without also using it for other taxes or for full bookkeeping. But there are some important details about what “using MTD software” actually means, what HMRC expects for digital records and digital links, and how far you can go with a “minimum-change” approach. This article walks through what it looks like to use MTD software only for VAT, what options you have, and what pitfalls to avoid—especially if you currently rely on spreadsheets, paper records, or older accounting tools.

What “Making Tax Digital software” means in plain English

When people say “MTD software,” they’re usually referring to one of two things:

First, a full accounting package that keeps your books and sends VAT Returns to HMRC through an MTD connection. Think of products where you record sales, purchases, bank transactions, and VAT coding inside the same system, and it produces the VAT Return figures automatically.

Second, “bridging software” that takes VAT figures from somewhere else (often a spreadsheet) and sends them to HMRC through an MTD connection. Bridging software is typically lighter-weight and cheaper, because it isn’t trying to do your bookkeeping; it is mainly a secure digital “pipe” for VAT Return submission and sometimes for maintaining a basic digital audit trail.

Both types can count as “MTD software” as long as they are compatible with HMRC’s MTD for VAT requirements and can submit VAT Returns through the MTD interface (rather than the old VAT portal method). The key point is that “MTD software” doesn’t necessarily mean “new bookkeeping system.” It can mean “whatever is needed to file VAT Returns in the required way.”

Why VAT is usually the first (and sometimes only) reason people adopt MTD software

For a lot of businesses, VAT is the compliance area that forces a change. VAT Returns are frequent, deadlines are strict, and errors can be costly. When MTD for VAT applies to you, you can’t simply log into the old HMRC VAT portal and type the numbers in by hand. The VAT Return has to be sent using MTD-compatible software.

That alone drives many businesses to adopt just enough software to satisfy VAT obligations—especially if their internal bookkeeping process is already working well, or if they have a bespoke system that they don’t want to replace.

So if your question is essentially: “Do I have to use MTD software for everything, or can I use it only for VAT?” you’re describing a common approach. Many organisations use a targeted solution where VAT Return submission is the only thing done through MTD-compatible software, while bookkeeping, invoicing, and management reporting remain elsewhere.

Yes, you can use MTD software just for VAT—what that usually looks like

Using MTD software “just for VAT” typically means one of the following setups:

You keep your bookkeeping in spreadsheets and use bridging software to submit the VAT Return. You might maintain a VAT control workbook that calculates box figures, then the bridging tool transmits those figures digitally to HMRC.

You keep your bookkeeping in an older accounting system that can’t submit VAT Returns via MTD, and you use an MTD tool to extract or import the VAT numbers and file them. In some cases, you export a VAT report to a file, then load that into bridging software.

You use a full accounting package, but only for VAT reporting and VAT submission, while most day-to-day bookkeeping happens elsewhere. This can occur when a business wants a “VAT-only” environment that receives periodic totals or journals from another system.

The common thread is that VAT Return submission is the primary function you need. Everything else is optional—provided you still meet the record-keeping and process expectations related to MTD for VAT.

The crucial catch: “VAT-only” still needs digital records and digital links

Here’s where things can get misunderstood. Even if you only adopt MTD software to file VAT Returns, MTD for VAT isn’t only about the act of submission. It also introduces expectations around digital record keeping and how the VAT Return figures are derived.

In everyday terms: it’s not enough to merely send the nine VAT boxes via software. HMRC expects that your VAT records are kept digitally and that there is an appropriate digital journey from the underlying records to the VAT Return submission. This matters most when your process includes spreadsheets, manual rekeying, copy-and-paste, or multiple systems.

Many businesses can still keep spreadsheets and still be “VAT-only” in their software usage—but they may need to ensure that the numbers flow through digital links rather than being manually typed in at the end. Digital links can include things like cell formulas between spreadsheets, data imports/exports, or integrated links between systems. The overall principle is to reduce manual transcription that can introduce error and break the audit trail.

This doesn’t mean you must buy a full accounting system. It does mean you should design a VAT workflow that respects the idea of a digital trail, even if the only “MTD software” part is the submission tool.

What counts as “using MTD software” for VAT submissions

If your goal is VAT-only, you should be clear about what you need from the software. At minimum, MTD-compatible VAT submission software should be able to:

Connect to HMRC using the proper authorisation method for your business (or through your agent if your accountant files for you).

Submit VAT Returns via the MTD route.

Confirm receipt and provide a submission reference or acknowledgement.

In many cases, it is also helpful if the software can:

Pull VAT obligations and due dates (so you can confirm which period you are filing).

Retrieve past VAT submissions (useful for checks and reconciliations).

Store a record of what was filed and when, along with supporting reports or attachments.

For “VAT-only” usage, the extras are not always required, but they can make governance and troubleshooting much easier.

Bridging software: the most common “VAT-only” route

Bridging software exists because many businesses have good reasons to keep their bookkeeping in spreadsheets. Spreadsheets can be fast, flexible, and deeply customised. They can also be the result of years of refinement. Bridging software is aimed at allowing those businesses to keep their spreadsheet process while still filing VAT Returns in a compliant way.

In a typical bridging setup, you have a VAT workbook that calculates box totals. The bridging tool then “maps” certain cells (or a range) to the VAT boxes. When you submit, it reads the values digitally from the spreadsheet and sends them to HMRC.

This is often the cheapest and least disruptive solution, especially for micro-businesses, property landlords with VAT registration, or organisations that have low transaction volumes but still need to file VAT.

However, bridging software is not a magic wand. It doesn’t automatically fix issues like inconsistent VAT coding, incomplete transaction records, or weak reconciliation processes. It’s a submission mechanism. Your underlying spreadsheet method still needs to stand up to scrutiny and support accurate VAT reporting.

Full accounting software used “only” for VAT: when that makes sense

Sometimes, the simplest VAT-only strategy is to use a mainstream accounting package but keep its scope limited. For example, you might:

Use the package to maintain VAT codes and run VAT reports.

Post summary journals from another system each week or month.

Use bank feeds and rules only for VAT-relevant transactions.

Generate the VAT Return directly from the software and submit via MTD.

This approach can be attractive if you want more structure than a spreadsheet provides but still don’t want to rebuild your entire finance process. It can also help if you have partial exemptions, complex VAT treatments, or multiple VAT registrations (for example, groups or divisions) and want stronger audit trails.

The trade-off is that once you adopt a full accounting package, there can be a temptation (or expectation) to use it more broadly. That isn’t necessarily a bad thing, but if your goal is strictly VAT-only, you’ll want to keep the workflow disciplined so you don’t end up duplicating work between two systems.

Can you use MTD software only to submit the VAT Return and keep paper records?

Businesses sometimes ask whether they can keep records on paper, do calculations manually, and then use MTD software solely as a filing gateway. This is usually where the “VAT-only” idea runs into a practical boundary.

MTD for VAT is associated with digital record keeping, and the expectation is that relevant VAT records are kept digitally. In practice, there are businesses with mixed processes, and some may digitise a paper-based workflow by entering totals into spreadsheets or a system that becomes the digital record. If you are starting from paper, the step that tends to be required is moving the VAT record keeping into a digital format so that the VAT Return figures can be derived from those digital records.

If you’re currently paper-heavy, the most minimal shift is often to maintain a digital VAT summary ledger (even if detailed invoices are stored physically) and ensure your VAT calculations draw from that digital summary. That said, if your records are mostly paper and you are rekeying totals at the end of a period, you should be careful: the more manual the process, the more likely it is to fall short of the intended digital journey and introduce errors.

What about businesses using spreadsheets—are they allowed?

Spreadsheets are widely used for VAT and can still be part of a VAT-only approach. The key is to ensure the spreadsheet system forms part of a coherent digital record. If your VAT records are in spreadsheets and the VAT Return is filed through bridging software that reads those figures digitally, that is the typical spreadsheet-friendly solution.

Spreadsheets can also be used in combination with other tools. For example, you may export transaction data from your POS system or invoicing platform into a spreadsheet that calculates VAT totals. If that export and calculation process is consistent and you avoid manual rekeying of totals between steps, it can still align well with a “digital link” approach.

Where spreadsheets become risky is when the VAT return is created by manually typing values from different sources into a final spreadsheet, or by copying and pasting figures without a clear digital trail. That can make it harder to demonstrate accuracy and repeatability, and it can increase the chance of mistakes.

Using MTD software just for VAT while your accountant does everything else

Another common scenario: you manage your day-to-day records in whatever method works for you, and your accountant prepares the VAT Return. In that case, your accountant or agent might be the one using MTD-compatible software to submit the VAT Return on your behalf.

This still counts as using MTD software for VAT, but the user of the software is your agent rather than you directly. Many businesses prefer this because it keeps the compliance burden with the professional, and it can reduce the risk of authorisation errors or accidental submissions.

If your accountant is submitting VAT Returns, it’s worth agreeing in advance:

What format you will provide records in (spreadsheets, reports, exports).

How VAT coding decisions are handled (for example, reverse charge, EC supplies, domestic reverse charge in construction, partial exemption adjustments).

What checks will be done before submission (reconciliations, reasonableness tests, prior-period comparisons).

Where the filed VAT Return and supporting working papers will be stored.

In an accountant-led approach, the “VAT-only” focus can be even sharper, because your internal systems can stay largely unchanged as long as you can provide the data they need in a workable digital form.

Common reasons people choose VAT-only MTD software

There are plenty of sensible reasons to adopt MTD software solely for VAT:

You have a stable bookkeeping workflow and changing it would introduce more risk than benefit.

You are a small business with low transaction volume and don’t want subscription costs for features you won’t use.

You have a bespoke system (for example, industry-specific software) and only need a compliant VAT submission route.

You are mid-transition between systems and want a temporary bridge for VAT compliance.

You file VAT but have straightforward accounts (for example, you are not yet ready to adopt a full cloud bookkeeping approach).

VAT-only adoption can be pragmatic and cost-effective, as long as you pay attention to the quality of your underlying VAT records and calculations.

Risks and pitfalls of the “VAT-only” approach

VAT-only setups can work brilliantly, but there are a few recurring problems that trip people up:

One issue is fragmented data. If sales are in one system, purchases in another, expenses on personal cards, and VAT calculations in a spreadsheet, the VAT Return can become a patchwork. That can increase the time spent reconciling and the likelihood of omissions.

Another issue is manual adjustments without documentation. VAT often involves adjustments—bad debt relief, fuel scale charges, partial exemption calculations, reverse charge entries, or one-off corrections. If your VAT-only approach relies on manual tweaks to the box figures, you need strong documentation and consistency so you can explain what changed and why.

A third issue is lack of audit trail. If a VAT Return figure can’t easily be traced back to the underlying transactions or reports, you may struggle if queries arise. Even if you are confident the numbers are right, it’s helpful to have a clear route from transaction-level data to VAT boxes.

Finally, there’s the risk of compliance drift. A business might start with a clean VAT spreadsheet and bridging tool, but over time the spreadsheet becomes more complex, multiple versions circulate, and control weakens. If you take the VAT-only path, treat the VAT workbook as a controlled compliance document, not just an informal calculation sheet.

How to decide which VAT-only option is right for you

The “best” VAT-only MTD solution depends on your current workflow and the complexity of your VAT position. Here are some practical decision points.

If you already do VAT calculations in a spreadsheet and the process is reliable, bridging software is often the simplest route. You will likely want a bridging tool that integrates smoothly with Excel (or your spreadsheet platform), supports cell mapping, and provides a clear submission log.

If you have multiple revenue streams, higher transaction volumes, or frequent VAT edge cases, a full accounting package might reduce stress by centralising VAT coding and reporting. Even if you only use it for VAT reporting, having transactions categorised within a structured VAT engine can reduce errors.

If your accountant prepares your VAT Returns and you prefer not to touch submissions, an agent-led arrangement can be ideal. In that case, the key is ensuring your data exports and record-keeping are consistent enough for them to prepare and file efficiently.

If you are in a transition period (for example, migrating to a new finance system), bridging can act as a temporary compliance layer. Just be careful with “temporary” solutions that become permanent without proper controls.

What “VAT-only” does not mean: you still need good VAT governance

It’s tempting to treat VAT-only software as a checkbox. But VAT compliance isn’t only about the submission. The submission is the final step of a broader process: capturing transactions correctly, applying the right VAT treatment, reconciling to bank and sales systems, dealing with adjustments, and maintaining evidence for the figures.

Even with bridging software, you should build a routine that includes:

A reconciliation of sales totals to invoices or POS reports, and purchases to supplier invoices.

A check that VAT codes are applied consistently (especially where some items are exempt, zero-rated, reduced rate, or outside the scope).

A review of unusual variances versus prior periods.

Clear support for any manual adjustments.

Retention of the submitted VAT Return and a copy of the workings that produced the box figures.

In other words, “VAT-only” can be lightweight, but it shouldn’t be sloppy.

Practical workflow examples

To make this more concrete, here are a few examples of how VAT-only MTD usage might look in practice.

A sole trader consultant keeps a spreadsheet of invoices issued and expenses paid. Each line has a VAT rate and VAT amount. At quarter-end, the spreadsheet calculates totals for output tax and input tax. Bridging software reads the VAT box totals from specific cells and submits them to HMRC. The consultant saves a PDF of the VAT workings and the submission receipt in a folder for that quarter.

A small retailer uses an EPOS system for sales and a separate tool for purchase invoices. Each month, they export sales and purchases into a spreadsheet where VAT is summarised by rate. A controlled “VAT summary” spreadsheet pulls those exports in via tabs and formulas, reducing copy-and-paste. Bridging software submits the quarter-end totals. The retailer runs a reasonableness check by comparing gross sales and VAT to the EPOS totals for the period.

A construction subcontractor deals with domestic reverse charge on certain transactions. They use an accounting package only to code and report VAT accurately, because reverse charge handling can be fiddly. Day-to-day invoicing happens in another tool, and weekly they post a summary journal into the accounting package. The VAT Return is generated and submitted through the accounting package. Their accountant reviews the VAT report and reconciles key totals before filing.

Will using MTD software just for VAT save money?

Sometimes, yes. Bridging software can be cheaper than a full accounting subscription, and it can reduce the amount of change management required. If your current system is efficient and accurate, VAT-only adoption may be a cost-effective way to meet compliance requirements without paying for features you won’t use.

But cost shouldn’t be measured only in subscription fees. Consider the time spent preparing VAT figures, the risk of errors, and the effort involved in maintaining and controlling spreadsheets. In some businesses, moving to a full accounting package reduces the overall “VAT admin” burden enough that the subscription cost is offset by saved time and reduced stress.

So VAT-only can save money, but only if it fits your workflow and doesn’t create hidden costs through manual work and error correction.

Can you switch later from VAT-only to full bookkeeping software?

Yes, and many businesses do. VAT-only adoption can be a stepping stone. A common path is:

Start with bridging software and spreadsheets to satisfy MTD for VAT.

Over time, realise that the spreadsheet process is getting more complex, or transaction volume is increasing.

Move to a full bookkeeping package and migrate data, often at the start of a new VAT period or financial year.

If you think you may switch later, it’s worth keeping your VAT records well-structured now. Clean VAT coding, consistent transaction categories, and tidy reconciliations will make any future migration easier.

How to keep a VAT-only setup compliant and low-stress

If you want to use MTD software just for VAT, aim for a process that is simple, repeatable, and controlled. Here are practical habits that help.

Keep one “master” VAT workbook per VAT registration, and avoid multiple versions floating around. Use a consistent naming convention by period.

Design your workbook so that VAT box totals are generated by formulas, imports, or structured tables rather than manual typing. The fewer manual steps, the fewer errors.

Document any adjustments in a dedicated tab with dates, descriptions, and amounts. Tie these adjustments to source documents or explanations.

Run a reconciliation checklist each period. Even a short checklist can catch a lot: compare sales totals to your invoicing system, reconcile the VAT control totals, and review variances.

Store submission receipts and VAT workings together. If you ever need to revisit a quarter, you’ll be glad everything is in one place.

Set internal deadlines ahead of the filing deadline. VAT Returns are stressful when everything happens at the last minute. Build a buffer so you have time to correct issues before submission.

What if you’re registered for VAT but below the threshold?

Some businesses are voluntarily registered for VAT even if their taxable turnover is below the compulsory registration threshold. If MTD for VAT applies to your VAT registration, you still need to submit VAT Returns via MTD-compatible software, regardless of why you are registered.

For voluntarily registered businesses, VAT-only software is often a good fit. The transaction volume may be manageable in spreadsheets, and the main requirement is simply to file correctly and on time. Just ensure your VAT records are kept digitally and that your VAT Return figures can be traced back to those records.

What about other taxes—does VAT-only MTD affect them?

Using MTD software for VAT does not automatically mean you are using MTD for other taxes. VAT and other tax regimes can have different timelines and requirements. In practice, many businesses adopt digital tools in stages, starting with VAT because it is frequent and compliance-driven.

That said, once you have a digital workflow for VAT, you may find it easier to digitise other parts of your finance process too. But that is a business decision, not an automatic requirement of using MTD software for VAT submissions.

Answering the question directly

So, can you use Making Tax Digital software just for VAT? In most situations, yes. Many businesses use bridging software or limited-scope accounting software purely to submit VAT Returns through the MTD route, while keeping their broader bookkeeping and finance processes unchanged.

The key is to remember that VAT-only doesn’t mean “do everything manually and just press send in a tool.” You still need a sensible digital record-keeping approach and a coherent digital journey from your records to the VAT Return submission. If you can achieve that—often through well-designed spreadsheets and bridging software—then a VAT-only MTD setup can be compliant, cost-effective, and surprisingly straightforward.

If you’re aiming for the lightest possible touch, focus on building a controlled VAT process: digital records, minimal manual steps, clear adjustments, and good reconciliation. Do that, and you can keep your existing systems while meeting your VAT obligations through MTD software—without turning your whole finance function upside down.