MTD for VAT - what you need to do now

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By Philip McNeill, Head of Taxation (Tax, Practice & Owner Managed Business Taxes)

14 December 2018

Ready or not, here we come! MTD for VAT starts in April 2019. Its introduction is unlikely to be trouble-free. Don’t wait until April. Philip McNeill looks at a what you need to do now.

MTD for VAT arrives in April 2019. This is what you need to do now:

1. Set up an Agent Services Account (ASA). This is the new portal to access HMRC Agent Services for MTD. Without this, you will be unable to access client VAT data under MTD or submit returns on their behalf. If you signed up for the Trust Registration Service or the pilots for MTD for income tax self-assessment or VAT you will already have one, otherwise, this needs to be top of your list.


2. Set up client Business Tax Accounts (BTA). Does your client need a Business Tax Account (BTA)? While it is possible to act for an existing client without them having a BTA, they will need a BTA to look at their VAT returns and receive notice to file. MTD for VAT means communication with business will be digital – via the BTA. In the future, clients will need a BTA to authorise an agent and any client submitting their own VAT returns will need a BTA.


3. Link your software to your ASA. Is your software MTD compliant and linked to your ASA? Having an ASA is not enough. Your software must be linked to your ASA. Once you are signed up, returns must be submitted through the MTD compliant software. Check the HMRC list for compliant software or speak with your software supplier.


4. Check client visibility and authorisation. Don’t expect to see your clients within your ASA. Clients will only be visible within your MTD software. Watch out if you have multiple ‘old’ Government Gateway (GG) logins – perhaps one for each office: each GG will need to be linked separately within the ASA. If you use a number of different software packages, each will have its own client view. Be aware that in future clients are only going to be visible where authorisation was online.


5. Link your clients to your ASA. Clients will need to be individually linked within the ASA. There are two requirements here. The client will need to be signed up for MTD for VAT. And you will need to identify the relationship so the client can be linked to your ASA.


6. Don’t forget the direct debit. Clients will need a new direct debit for MTD for VAT and there is only a limited window each month to make the change. HMRC requires that clients sign up 15 days in advance for a new direct debit before they submit a return.

MTD for VAT is subject to ongoing change as development of the new submission process continues. Expect hiccups,  don’t leave everything until the last minute. If you wait until after the January SA filing season, it is likely to be a very steep climb.