If a business has ‘taxable turnover’ that is above the VAT registration threshold of £85,000 it must follow the Making Tax Digital (MTD) rules from  1 April 2019.

It is important to note that the definition of ‘taxable turnover” for MTD is not the amount of turnover that is subject to Income Tax or Corporation Tax, it is the amount of taxable turnover as defined for VAT registration purposes.


Taxable turnover for MTD therefore includes :

UK supplies of VAT standard-rated, reduced rated and zero-rated goods or services

Reverse charge services received from overseas businesses if they would be standard-rated, reduced rated and zero-rated if made in the UK .

Reverse charges on certain goods which are subject to the domestic reverse charge in the UK (eg, on mobile phones).

Self-supplies of construction services


It does not include

UK supplies of VAT exempt goods or services (eg, rents from residential property)

Reverse charge services received from overseas businesses that would be exempt if made in the UK

Income outside the scope of VAT because it is not a consideration for a supply

Supplies of services where the place of supply is outside the UK under the ‘place of supply’ rules


If you need advice on VAT or MTD Contact me, David Sutton.