Digital links and bridging software for MTD for VAT

acrenvo.com/guides/mtd-vat-digital-links-and-bridging-software, last reviewed 31 October 2026

Tom is fictional, but his set-up is a common one. He is a self-employed electrician, registered for VAT, and his sales invoices come out of an invoicing app while his costs live in a spreadsheet he has kept for years. Each quarter his bookkeeper turns the two into a VAT Return. Tom wants to keep the spreadsheet, and he wants to know which of the steps between it and HMRC are allowed under Making Tax Digital (MTD) for VAT. This guide walks through what GOV.UK’s VAT Notice 700/22 says about digital links and bridging software.

What your software has to be able to do

MTD for VAT looks at what your software does taken as a whole, so the jobs can be shared across more than one product. To do this, you’ll need either:

• a compatible software package that allows you to keep digital records and submit VAT Returns
• bridging software to connect non-compatible software (like spreadsheets) to HMRC systems

The Notice calls the set of software you use “functional compatible software”, and says that, together, it must be able to do three things. It must be able to:

• record and preserve digital records
• provide HMRC information and returns from data held in those digital records, using the API platform
• receive information from HMRC, using the API platform

A spreadsheet on its own usually covers only the first of those. For example, a spreadsheet (or other software product capable of recording and preserving digital records) may not be able to perform the other functions listed above. However, this can still be a component of functional compatible software, as long as it is used together with software that does the other things. The complete set of digital records to meet Making Tax Digital requirements does not have to be held in one place or in a single piece of software.

When a digital link is needed

The rule is about the journey your figures take once they are in your records. Once data has been entered into software that you use to keep and maintain your electronic account, any further transfer, recapture or modification of that data must be done using digital links.

That means retyping is out, even when it feels harmless. The Notice gives an example: for example, you must not note down details from an invoice in a ledger, then use that handwritten information to manually update another part of the business functional compatible software system.

A digital link does not need any manual intervention, such as the copying over of information by hand, or the manual relocation of data between 2 or more pieces of software. This could be a transfer or exchange of data within a business (for example, between 2 systems), or a transfer of data to a tax agent.

What HMRC counts as a digital link

Spreadsheet formulas are the simplest kind of link. A digital link includes linked cells in spreadsheets, for example, if you have a formula in one sheet that mirrors the source’s value in another cell, then the cells are linked.

HMRC also accepts the following as digital links:

• emailing a spreadsheet containing digital records, so the information can be imported into another software product
• transferring a set of digital records onto a portable device (for example, a pen drive, memory stick or flash drive) and physically giving this to someone else, who then imports the data into their software
• XML, CSV import and export, and download and upload of files
• automated data transfer
• API transfer

This list is not exhaustive. For Tom, this means a CSV (comma-separated values) export from his invoicing app, imported into the spreadsheet, is a link, and so is emailing the spreadsheet to his bookkeeper for importing. What would break the chain is his bookkeeper reading totals off the screen and typing them in again.

Where a digital link is not needed

Not every piece of software that touches VAT is part of your records for MTD. VAT information may be captured and retained in other software (for example, sales invoicing software or general ledger systems). However, if this software is not used to maintain your electronic account, there is no requirement for a digital link to be used when data is transferred to the electronic account.

Some calculations also happen outside the records. When you prepare your VAT Return, you may need to make calculations outside of the software you use to keep the digital records. For example, a capital goods scheme adjustment calculation done in a spreadsheet may need some form of manual input to send your VAT Return information to HMRC.

Bridging software and API-enabled spreadsheets

However the records are kept, the return itself has to reach HMRC through software. The submission of information to HMRC must always be through an API. That is where bridging software comes in, for anyone whose records sit in software that cannot talk to HMRC. The Notice describes it this way: this is a digital tool that incorporates the relevant Making Tax Digital APIs needed to connect accounting software to HMRC systems. It allows the required information to be reported digitally to HMRC, and for HMRC to communicate digitally with the business.

Some spreadsheets have that connection built in. These are spreadsheets that incorporate the relevant Making Tax Digital APIs. They can either:

• combine with accounting software to digitally submit the required information to HMRC and allow HMRC to communicate digitally with the business
• be used to keep digital records and then directly submit the required VAT information digitally to HMRC

GOV.UK’s page on finding compatible software includes a search for both record-keeping software and bridging software. If your software is compatible, it will ask you to grant authority to access the data from HMRC on your behalf. The authority lasts for 18 months, but you can check or withdraw your permissions at any time.

If you also use MTD for Income Tax, the guide to spreadsheets and bridging software explains how the same route works there, and the guide to keeping records for both taxes sets the two sets of record rules side by side. For how VAT and Income Tax fit together more generally, start with the guide to MTD for VAT and MTD for Income Tax.

Questions about digital links and bridging software for VAT