Why aren’t firms signing clients up to MTD for VAT?
Practitioners are still dragging their heels when it comes to signing-up clients ready for this month’s official launch of Making Tax Digital for VAT. So why aren’t accountants eager to get clients involved?
AccountingWEB members turned out in Spartacus-like numbers to identify themselves among the majority uncovered in a recent FOI request by Float that found that only 2% of accounting firms had registered clients ahead of 1 April MTD for VAT ribbon-cutting.
Responding in the article’s ever-expanding comment section, practitioners expressed frustration about HMRC’s systems and communication. In the words of Elvis, Glenn Martin said that at this early stage, “Only fools rush in.”
VAT start date
Rather than circling 1 April on their calendars, practitioners are working more towards the end of June. “Unless I'm missing something anyone with a VAT quarter of March 2019 who signs up now will have to file the January to March return using MTD when it doesn't become compulsory until their June return, so why would they want to sign up now?” commented AccountingWEB member GW.
“They need to keep digital records from 1 April, but they don't need to register until later.”
Given the House of Lords' pushback and the frustration voiced on Any Answers from members grappling with the Agent Services Account, accountants like Jon Griffey are not prepared to deviate from their normal VAT dates: “We have heard much wailing and gnashing of teeth on here from agents who have signed clients up early, and the impression is HMRC is fixing the MTD system on the hoof. Best let others waste time whilst it is straightened out.”
Similarly, Glenn Martin was unsurprised by the sluggish sign-ups: “Was anyone expecting 2m businesses to be chomping at the bit on 1st April waiting for this new filing system to be ready?”
Though Martin’s clients are ready for the rollout, he is not jumping in just yet: “My first return won’t be submitted until 7 August so will let others iron out the issues in the system first (I am sure there will be plenty of those) before I dial into it.”
The same goes for Mr Mischief. Considering the uncertainty surrounding Brexit, which has already held up dispatch of self assessment penalties and news from the pilot, he’s going to continue using the “Just In Time project management” that he’s used for the last two years on MTD.
AML registration delay
For others, it’s not a case of why aren’t they signing up clients, it’s more of when can they. Since you can’t sign clients to MTD without having an AML registration in place, practitioners like SXGuy are waiting for their registration to be approved.
“Those that for whatever reason have had to register with HMRC AML supervision in recent months will know that the 45-day waiting period is a laughable joke. So what happens to those who perhaps registered with HMRC within the time they specified only to find out that come April 1st the decision is still pending?" they asked.
While some are still cagey about HMRC moving the goalposts, the April launch has nudged members into reviewing their client lists and categorising which clients need to adhere to the MTD rules.
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“I did a check of my clients who would be affected and sent them round a one-page note because I thought that they would view the QuickBooks adverts on the TV and wonder what it was all about,” said Jennifer Adams.
While she assured her clients that all was in hand and confirmed their start quarter, she stopped short of signing them all up. “Like others here, my first one is to 30 June and we have been told that if you signed up then the next return would have to be submitted via MTD, which for many is 31 March.”
The lack of client knowledge has caused practitioners to question HMRC’s pre-launch communication. AccountingWEB member Davey Jones Locker reported that less than 10% of his clients who were registered for VAT and above the threshold have received notification letters. Hardly of GHarr497688’s clients have received a letter and most know nothing about it. “Shambles is an understatement,” they said.
Trust in HMRC
That’s why trust in HMRC’s systems is a roadblock for many. In one example, AccountingWEB member Jdopus’s tried registering a single client to test the system worked, but things didn’t end well.
“The webpage immediately froze as I tried to register them for MTD and it was impossible to proceed any further. If this isn't fixed by the time April returns are due, there are going to be an awful lot of people without any way to submit VAT returns at all.”
Passions clearly flaring, GHarr497688 has far stronger words on this matter: “I’m signing no one up to a system that clearly is in chaos. No one understands HMRC’s ASA portal or the software that’s provided. I will write to HMRC and they can put me in prison. It would be far less stressed than I am now.”
Richard is AccountingWEB's Practice Editor. If you have any comments or suggestions for us get in touch.