MTD for VAT HMRC publishes step by step guide for agents
By Philip McNeill, Head of Taxation (Tax, Practice & Owner Managed Business Taxes)
14 February 2019
Philip McNeill discusses the newly released HMRC guidance (8 February 2019): Making Tax Digital for VAT as an agent: step by step.
Rather than publishing something entirely new, HMRC has, in essence, created an index to existing material. This should make the material more accessible and provide a landing page for agents.
The guidance sets out six key steps and provides links to further material. The six HMRC steps are:
1. Talk to your clients
2. Get the right software
3. Create an agent services account
4. Link clients to your agent services account
5. Sign your clients up for Making Tax Digital
6. Authorise your software
Talking to your clients and getting the right software
From HMRC’s perspective, this involves identification of mandation date. Which clients are in from April 2019, which deferred until October 2019?
There is also a link to the Making Tax Digital for Business - stakeholder communications pack and the MTD software suppliers page.
From a practical perspective, firms should ensure that any clients in the deferred group have received a formal letter deferring their MTD start date. If not, they should contact the HMRC VAT helpline.
Clients voluntarily registered (with turnover under the mandation threshold of £85,000) may need reassuring that the existing arrangements continue for them.
Businesses seeking exemption will need to contact HMRC. Grounds for exemption are, per VAT notice 700/22 para 2.2:
You will not have to follow the Making Tax Digital rules where HMRC is satisfied that:
- your business is run entirely by practising members of a religious society whose beliefs are incompatible with the requirements of the regulations (for example, those religious beliefs prevent them from using computers);
- it is not reasonably practicable for you to use digital tools to keep your business records or submit your returns, for reasons of age, disability, remoteness of location or for any other reason;
- you are subject to an insolvency procedure.
These may apply even if you are not currently exempt from online filing for VAT.
Creating an agent services account and linking to clients
To access HMRC MTD services, agents will need an MTD ‘agent services’ account. If you have used the Trust Registration Service, you will already have one.
For firms wishing to set up an account, there is a link to the agent services page. This asks for AML registration details. ICAS members should use 12 months from their membership renewal date as the expiry date.
Try the Link clients to your agent services account page to address the next stage of digitally linking to your clients on HMRC’s new system.
For agents not based in the UK, there is separate guidance - Apply for an agent services account if you are not based in the UK.
Signing up
The final two stages from HMRC are signing clients up to the MTD pilot and authorising your software.
HMRC is encouraging businesses to sign up as soon as possible. You may wish to agree a start date with clients. Going into the pilot is designed to be a one-way street: in essence, it means entering MTD early and no longer using the existing portal.
As regards authorisation of software, HMRC says: ‘Before you can send VAT returns digitally, you’ll need to authorise your software. Ask your software supplier if you do not know how.’
As with all computer systems, there are likely to be teething problems. Check the earliest likely MTD submission date for your firm – which may be for the June 2019 quarter – and try an get in some practice before the return is finally due.