UK VAT and Making Tax Digital in Dynamics 365

What the ledger has to hold

Each transaction carries a VAT treatment, and the return is the sum of those treatments.

VAT codes per transaction type: standard, reduced, zero-rated, exempt and outside scope

Reverse charge and postponed VAT accounting for imports where used

Partial exemption and flat-rate schemes where they apply

Digital records kept in the ledger, with links between records

A VAT liability account that reconciles to the return

The route to HMRC

VAT data comes from the ledger and is submitted through an approved route. We confirm the route in discovery, including using bridging software or a tool you already have.

What we test before go-live

The first return from the new system should be a check, not a discovery.

Sample transactions of each VAT type

Credit notes and bad-debt adjustments

Imports and the reverse charge

A reconciliation of the VAT account to a test return

How an engagement runs

It starts with a 45-minute consultation, then a discovery and fit-gap workshop on your own processes. You receive a written fit-gap and a phased plan before a programme is agreed. Four phases follow, each with something you can use and review.

Discover

Process workshops, data audit, and a fit-gap against the standard product.

Design

Solution blueprint, integration map, and the extensions we will actually need.

Deploy

Configuration, migration rehearsal, role-based training, UAT and phased cutover.

Support

Hypercare, managed services, client portal, scheduled optimisation reviews.

What drives the cost: users, legal entities and currencies, integrations, data migration and the gaps found against standard. See how pricing works or run the three-minute readiness score.

Frequently asked questions

Does Dynamics 365 support Making Tax Digital for VAT?

The ledger holds the VAT records and produces the return data. The submission route to HMRC is confirmed in discovery, and may use a tool you already have.

Can it handle the flat rate scheme or partial exemption?

Yes, with the design agreed in Design and tested before go-live.

Is this tax advice?

No. We configure the system to the treatments you and your tax adviser confirm.

Statutory rates, filing rules, mandate dates and data-protection requirements are set by the relevant authorities and change; we confirm the current position with you and your advisers before configuration. General information, not tax, legal or data-protection advice, and not a statement that any product or service is certified or approved by a regulator.

Last reviewed 2026-10-16

UK VAT and Making Tax Digital in Dynamics 365.