Digital VAT: Accountants reveal their pains

4th Sep 2019
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A tale of obstacles, obligations and opportunities

Keytime customers have told us about the various frustrations and issues that blighted them and fellow accountants as they tried to get over the finish line for the first major MTD for VAT quarterly deadline last month.

For many practitioners and businesses, the date passed without incident as they navigated it successfully. Indeed, HMRC reported that nearly one million businesses have enrolled into the service, making over 900,000 digital VAT submissions.

But a multitude of difficulties and blockages were revealed by our accountant customers as they reflected on how their first experience under the new MTD regime.

Here, we look at the main obstacles customers say they faced and what lessons can be learned.

Taxing sign-up

The general sign-up process proved unduly complicated, according to some customers contacting us. They struggled to navigate the new system, with some users receiving 403 or 500 errors, and a few – confused by the arduous initial stages or error messages – even attempted to sign up again! The issue was compounded by HMRC being slow to process and confirm sign-ups. Our customer support team felt practitioners’ pain, as queries about this continued into late July, just days away from the looming deadline.

11th hour filing

Leaving it late to hit a cut-off date is always a gamble and some latecomers tripped up. This was particularly a problem for those not leaving enough time to get to grips with the new process and filing requirements; they simply ran out of time to troubleshoot the problems. It also caught out those who pay HMRC by Direct Debit, the last day for which was 29 July. This date was arguably less well flagged up as a key deadline, with the focus predominantly on 7 August.

Obligation obstacles

HMRC seemed to have an issue making filing obligations available for some, which meant that MTD-compliant software would not search for obligations based on a start and end date range and an obligation status. This resulted in an error 404 – obligations missing – being returned when users tried to retrieve obligations.

Where’s the receipt?

Sending crucial information into the ether and receiving no response is disconcerting – and we had lots of queries about the lack of emails from HMRC confirming receipt of submissions. It is understandable to be nervous about this when you are used to it after submitting other types of return. However, there are no email receipts with the new service; the software tells you the status of the obligation and acts as confirmation.

Forget about it!

As the August deadline approached, the Keytime team heard reports from customers that HMRC had issued letters saying that if they had not already filed through the new process, to forget it, file using their original method, and try again next time. For the laggards or those suffering technical headaches, the last-minute reprieve must have been most welcome!

Lessons learned

  • The obvious message is to work ahead of the deadline next time! Reduce the pressure where you can and leave yourself time to address any problems.
  • With regards to the errors arising for obligations, the latest Keytime update includes an informative message about the situation and directing users to contact HMRC where this error is returned.
  • For those worried about the absence of a receipt of submission, HMRC’s MTD newsletter stated that it was reminding customers that they can view a copy of the return in their Business Tax account, which hopefully gives some peace of mind!  
  • Consider the opportunities. Look at the time taken and how you fared with the first stagger – are there improvements that can be made? Check in with business customers who filed themselves – was it a step too far and do they want an accountant to take over?
  • Get more information from HMRC. You can sign up to attend Talking Points – agent seminars – by clicking here. Sign up to HMRC’s MTD update for agents – edition 9 of which can be viewed here

It is natural to have some struggles with a new process like the much-hyped Digital VAT, but hopefully those who felt some pain the first time around will be old hands by the next quarterly submission.

Keytime is here to help customers on their digital journey; and when it comes to MTD, no question is too daft nor too complex to ask – we will always support where we can. Email [email protected] and one of the team will be happy to call you.