Applying for an exemption from MTD for VAT

acrenvo.com/guides/mtd-vat-exemption, last reviewed 31 October 2026

Margaret is fictional. She lets out a holiday cottage and runs a small farm shop beside it, registered for VAT, from a village where the internet connection drops out most afternoons. Her son used to send her VAT Returns for her, but he has moved abroad and she is wondering whether she can carry on without software. This guide explains what GOV.UK says about exemptions from Making Tax Digital (MTD) for VAT: who is already exempt, who can apply, how to apply and what happens while HMRC decides.

Who is already exempt

Most VAT-registered businesses are in MTD for VAT already. You’re exempt from Making Tax Digital for VAT, and do not need to apply if:

• you or your business are subject to an insolvency procedure
• you’ve cancelled your VAT registration but still need to send your final return

If neither applies to you, an exemption has to be asked for, and HMRC decides whether to grant it.

Who can apply

The test is whether using digital tools is reasonable for you, not whether you would prefer not to. You can apply if it’s not reasonable or practical for you to use computers, software or the internet to follow the rules for Making Tax Digital for VAT. This could be because:

• of your age, health condition, disability or where you live
• you object to using computers on religious grounds
• you do not have access to the internet

There may be other reasons you cannot follow the rules for Making Tax Digital. HMRC will still consider your application.

VAT Notice 700/22 gives two fuller examples of where it is not practical. You’ll be exempt if it’s not practical for you to keep records digitally due to:

• your location – for example, if you cannot get internet access at your home or business premises, and it’s not reasonable for you to get internet access at another location
• a disability – for example, if you cannot use a computer, tablet or smartphone for the frequency or amount of time it takes to keep digital records for your business

What HMRC does not accept on its own

The Notice is just as clear about the reasons that are unlikely to be enough by themselves. You might not be exempt if you:

• believe you should be exempt purely because of your age – HMRC will consider how your age and circumstances impact your ability to follow the rules for Making Tax Digital
• believe you should be exempt because you’re unfamiliar with the relevant software – HMRC will take into account how much you use (or intend to use) digital devices for other purposes, and if it’s reasonable for you to learn how to use Making Tax Digital software

Cost and effort are treated the same way. You will not get an exemption solely due to any extra effort, time or cost that may be needed when transitioning to Making Tax Digital, where HMRC considers it reasonable. However, HMRC will take any extra effort, time and cost into account in their overall assessment.

If someone else helps you

For Margaret, the help she had from her son matters here. The Notice expects the person helping to work with digital records too. If you get help from a third party to meet your obligations for Making Tax Digital (for example, a bookkeeper, agent, friend or family member), they’ll need either:

• full access to your digital business records – so you’ll need to be content that your information is secure
• you to keep digital business records and then electronically extract the data and send it to them by electronic means – for example, by using a pen drive or emailing a file

When that help ends, the Notice points to an exemption. If the third party stops supporting you and you do not think you can follow the rules for Making Tax Digital without their support, you should ask HMRC for an exemption.

One email a month lists the MTD software price changes we have checked and any changes to HMRC’s list of software. If that would be useful, you can sign up for the monthly price-changes email at the end of this page.

How to apply

To apply, you must call or write to HMRC. You’ll need:

• your VAT registration number
• your business name and address
• details of how you currently send your return
• the reason you think you’re exempt from Making Tax Digital
• authorisation from the business (if you’re applying on someone’s behalf)

Someone else can make the call for you. You can ask an agent, friend or family member to ask for an exemption on your behalf, but they must:

• fully understand your circumstances in relation to getting an exemption
• have authority to act on your business’ behalf – such as written authorisation sent to HMRC or verbal authorisation by telephone

It’s usually better to call HMRC yourself where possible, because you have a better understanding of your abilities and how you engage with technology in your personal life.

While you wait, and HMRC’s decision

HMRC replies by letter. The letter will tell you either:

• that you’re exempt and clearly set out what your obligations are
• why you’re not exempt and that you can appeal

If you are also joining MTD for Income Tax

A VAT exemption does not carry across to Income Tax by itself, but GOV.UK gives a shorter route for people HMRC has already exempted from MTD for VAT. If HMRC previously confirmed that you are exempt from sending VAT returns using Making Tax Digital compatible software because you are digitally excluded, contact Self Assessment general enquiries by phone or in writing with your National Insurance number, your VAT registration number, the reason you are digitally excluded and whether your circumstances have changed. If they have not changed, HMRC will confirm you are also exempt from Making Tax Digital for Income Tax; if they have changed, you will need to apply.

The guide to MTD for Income Tax exemptions covers the Income Tax side in full, and the guide to MTD for VAT and MTD for Income Tax explains how the two schemes fit together.

Questions about exemption from MTD for VAT