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MTD meltdown Monday

26th Jul 2019
Tax Writer Taxwriter Ltd
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Get ready to scramble. Monday 29 July 2019 is the last day that stagger one businesses can sign up to MTD, if they pay their quarterly VAT bills by direct debit.

Deadlines leap forward

The first quarterly VAT returns required to be submitted under MTD are for the quarter: 1 April to 30 June 2019 – this is known as the stagger one period. Stagger two is the quarter 1 May to 31 July, and stagger three relates to the quarter from 1 June to 31 August.

The filing deadline for stagger one VAT returns is 7 August, but the effective deadline for those businesses who have not taken part in the MTD pilot is either:

  • Monday 29 July – for those who pay by direct debit
  • Tuesday 4 August – for those who pay by electronic transfer

Why the DD delay?

As part of the switch to the new MTD computer system, all the payments of VAT made in association with MTD returns are being collected by a different HMRC bank account. It takes the bank seven working days to move the direct debit authorisation from HMRC’s old bank account to the new MTD-related bank account; hence the deadline for signing-up for MTD needs seven clear working days before the filing deadline. 

Most businesses give HMRC permission to set up a direct debit to pay their VAT, as this ensures they never miss a payment deadline, assuming there are sufficient funds in the business bank account.

Vital email address

If you sign up your client to MTD, rather than the business doing this by itself through its business tax account (BTA), you must provide a contact address for that client. Where the client is planning to pay their VAT by direct debit you must provide a working email address for the client.  

The business owner must agree to the terms and conditions of a new direct debit authorisation. This authorisation request is sent to the email address provided as part of the MTD sign-up process. You cannot provide this authorisation on behalf of your client, so you should not provide an email address for the client you control. If the client does not have access to a working email system, they should claim exemption from MTD filing (see VAT Notice 700/22 para 3). 

72 hours or more

Where a business pays its VAT by electronic transfer, and not by direct debit, the last day for a stagger one business to sign-up to MTD is Sunday 4 August. This is because HMRC can take up to 72 hours to confirm that the business has been registered for MTD.

On 24 and 25 July there were delays to HMRC sending out email confirmations of the MTD sign-up. That problem should be fixed by now. You should not attempt to submit a VAT return under MTD until the confirmation email has been received from HMRC.

Don’t sign up too early

For those businesses on annual VAT returns and stagger three periods there is still the danger of signing up for MTD too early. Those businesses must make sure the direct debit for the last non-MTD period has been paid before signing up for MTD.

If the business signs up too early, after the last non-MTD VAT return has been submitted but before the direct debit payment has been taken, that payment may not flow through to HMRC and the business could be landed with a surcharge penalty for late payment.

The key dates for stagger two and stagger three businesses are:

  • Stagger two – VAT return for quarter to 30 April is due 7 June, the direct debit should have been taken on 10 June. The business must sign up to MTD to submit the next VAT return for period to 31 July by midnight on Thursday 29 August 2019.
  • Stagger three – VAT return for quarter to 30 May is due by 7 July, the direct debit will be taken on 10 July. The business must sign up to MTD to submit the next VAT return for the period to 31 August by Friday 27 September 2019.   

Those businesses who submit an annual VAT return and make payments on account are part of the group which have a deferred start date to the first period beginning on or after 1 October 2019. Some MTD-compatible software is not ready to submit annual VAT returns yet, but HMRC can receive them as part of the MTD pilot.

Replies (35)

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By johnhemming
28th Jul 2019 12:28

I wonder if it is possible to join assuming that the DD will be lost, of if the DD is first cancelled or whether the validation will reject it. In any event it is probably best to wait until the next period.

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By Matrix
28th Jul 2019 18:14

I don’t know whether my clients i) received an email from HMRC regarding the DD transfer or ii) clicked on the link to authorise the DD.

I assume that if the DD does not go out on 10 Aug then I will find that clients did not do as they were told.

I am off on holiday so I expect I will find out when I get back.

Any idea how to check, other than the payment not leaving the bank account?

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Replying to Matrix:
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By johnhemming
29th Jul 2019 05:41

The only fully reliable check is the bank account.

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Replying to Matrix:
By Rebecca Cave
29th Jul 2019 13:41

I didn't say the taxpayer had to click on a link in an email to authorise.

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By Matrix
28th Jul 2019 18:44

Rebecca you are panicking me now.

Where does it say that a client has to click a link on an email for the DD to be transferred?

I have received an email to say that my VAT DD has been transferred and I didn’t have to do anything, notwithstanding I set my own business up from my ASA (as a client).

How do we know if our clients’ DDs will work next week?

Do I have to call HMRC? Please advise urgently.

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Replying to Matrix:
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By MissAccounting
29th Jul 2019 10:09

Matrix wrote:

Rebecca you are panicking me now.

Where does it say that a client has to click a link on an email for the DD to be transferred?

I have received an email to say that my VAT DD has been transferred and I didn’t have to do anything, notwithstanding I set my own business up from my ASA (as a client).

How do we know if our clients’ DDs will work next week?

Do I have to call HMRC? Please advise urgently.

Ive had a client forward the DD email onto me this morning and there is definitely no link to click on in there. It just states that it has been transferred over to the new system and also states "There is no need to take any action."

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Chris M
By mr. mischief
29th Jul 2019 09:37

This is so stupid. When my company changed banks 2 years ago, who organised for all standing orders and direct debits to switch over?

ME that's who. No writing to customers or suppliers to do all sorts of daft stuff. I mean, how hard can it be, HMRC?

If the direct debits do not go out and any of my clients get a stupid letter from these idiots, I will do a standard letter in reply. It will focus on the fact that HMRC and their incompetence is 100% to blame, and my client 0%.

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By LostinSuspense
29th Jul 2019 09:42

So clients are going to be told to click on links in e-mails from HMRC and accept amendments to them paying money across? How many will dismiss this as a 'scam e-mail' and how many will now use it to justify blaming us when they fall for another scam e-mail down the line?

Am sure it is more complex than that and fortunately I don't deal with this aspect at present.

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By petestar1969
29th Jul 2019 10:04

4th of August is a Sunday not a Tuesday, do you mean the 6th?

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Bee
By May bee
29th Jul 2019 10:13

I think the dates are 1 month out in the paragraph "The key dates for stagger two and stagger three businesses are"...

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Replying to May bee:
By Rebecca Cave
31st Jul 2019 10:04

The dates for signin-up for MTD are taken from CIOT information: https://www.tax.org.uk/policy-and-technical/making-tax-digital#enrollin_...
I would be very surprised if CIOT technical are wrong .

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Replying to Rebecca Cave:
RedFive
By RedFive
31st Jul 2019 10:55

Without wishing to labour the point, it is wrong:

Your paragraph:

The key dates for stagger two and stagger three businesses are:

Stagger two – VAT return for quarter to 30 April is due 7 July, the direct debit should have been taken on 10 July. The business must sign up to MTD to submit the VAT return for period to 31 July by midnight on Thursday 29 August 2019.
Stagger three – VAT return for quarter to 30 May is due by 7 August, the direct debit will be taken on 9 August. The business must sign up to MTD to submit the VAT return for the period to 31 August by Friday 27 September 2019.

>>>>

Quarter end 30th April vat return is due 7th JUNE, not July.

Quarter end 30th May vat return is due 7th JULY, not August.

You then state different vat quarter ends for sign up, hence the confusion.

Sorry to nit pick as I value your contributions, but you have replied incorrectly rather than checking your own info.

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Replying to RedFive:
By Rebecca Cave
01st Aug 2019 11:06

I see where I have gone wrong now. Apologies I will correct the article.
The quarter end 30 April 2019 is not required to be filed under MTD as it started before 1 April 2019. The first Stagger 2 period under MTD is the quarter 1 May to July 2019
The quarter end 30 May 2019 is not required under MTD as it started before 1 April 2019. The first Stagger 3 period under MTD is 1 June - 31 August 2019.

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By pauljohnston
29th Jul 2019 10:17

I have suggested to clients that they cancel the DD and pay manualy for the JUne month end. This they have done and in August will set up direct debit for next quarter.

This as usual is a complete shambles. Some clients have recd emails telling them to submit the VAT Return old way despite trying to sign up for MTD.

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By youngloch
29th Jul 2019 11:43

There are no links to click on with the DD email.

The only links to click on are where we have had to update clients email addresses (as under MTD they do now get a useful email confirming that the DD will be claimed) and it is the email update which does then send a message to them which they need to click on to confirm that the address is correct.

It does not affect the DD though.

I can say this with relative confidence as we as a practice went on board one quarter early and our DD went out fine.

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By ralan
29th Jul 2019 13:01

I just wish HMRC had everyone saying the same, I am absolutely fed up ringing VAT and been told different stories.
I have registered all my VAT Return clients for MTDfVAT and submitted the June returns, when no receipt was forthcoming I called VAT to be told that NO communication is now sent to the client but I have now received a forwarded email from a client from HMRC advising of the amount of VAT due and date it will be taken.
Also no clients to date have been asked to acknowledge for a change of D D, including our company, just an email saying a new DD was been set up.
Please Please can you stop telling us wrong information, it is bad enough getting it from HMRC

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By ralan
29th Jul 2019 13:01

I just wish HMRC had everyone saying the same, I am absolutely fed up ringing VAT and been told different stories.
I have registered all my VAT Return clients for MTDfVAT and submitted the June returns, when no receipt was forthcoming I called VAT to be told that NO communication is now sent to the client but I have now received a forwarded email from a client from HMRC advising of the amount of VAT due and date it will be taken.
Also no clients to date have been asked to acknowledge for a change of D D, including our company, just an email saying a new DD was been set up.
Please Please can you stop telling us wrong information, it is bad enough getting it from HMRC

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By like to be anonymous
29th Jul 2019 13:28

I must admit, Mr Mischief is right. MTD has all the hallmarks already of a typical HMRC [email protected] up and we haven't really started. no client lists on the new accounts, which twerp at HMRC thought that wasn't important then? give it another 12 months and the latest head of HMRC will be off with another knighthood. is it only us in the profession that can see it is being completely mismanaged by the biggest bunch of [email protected] known to man. no wonder some owners are selling their practices rather than have to deal with these [email protected].

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Replying to like to be anonymous:
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By Jackie in Wiltshire
30th Jul 2019 11:22

"...no client lists on the new accounts..."

Assuming you mean the ASA, clients that have been signed up for MTD DO appear on it. Their VAT number is given, with a field to enter a reference, which I have used to provide the client name. Look under Manage User Access, then under the tab marked "Clients".

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By Silver Birch Accts
29th Jul 2019 13:33

We filed the 30.06.19 VAT Return on the 25.07.19 claiming a repayment in excess of £5,000. Client has just called to say it was in his Bank on the 26.07.19
Good or what!

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By LancsBook
29th Jul 2019 18:22

We submit monthly and apparently went too early so the final old DD wasn't taken successfully - still trying to get this sorted out months later - HMRC on the phone and webchat keep fobbing me off saying just to wait or manually pay - which only pays off the subsequent returns, not the old one. They even promised an arranged call back, which they never did...

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RedFive
By RedFive
30th Jul 2019 07:59

Rebecca, you’ve got the stagger 2 and 3 dates wrong. You’ve added a month to both.

And really, as I’ve said elsewhere this is not that difficult.

We’ve had 4 months to sign up the first mandated clients. If you’ve waited until now for those then more fool you.

All 50 ish of my MTD mandated clients are signed up across all three stagger / quarter ends.

I initially had problems with a few obligation dates not being correct at hmrc side once signed in but plenty of time to sort and all in place now.

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Replying to RedFive:
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By Matrix
30th Jul 2019 07:17

RedFive - no one on this thread has suggested that they have not signed up and submitted all their MTD returns. The comments are regarding the farcical unknowns such as whether the DD will work or not.

I also did not find MTD hard - it took me seconds per client - but if the DDs don’t go out then it will take me ages to sort out. Although it seems that I was panicking unnecessarily as clients don’t need to click a link afterall.

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Replying to Matrix:
RedFive
By RedFive
30th Jul 2019 08:03

Fair enough and it wasn’t aimed at you.

My comment is aimed at this sort of article which I think is scaremongering in a typical Daily Mirror / Sun ‘worlds going to end because it’s hot today’.

Didn’t help with the DDR confusion (clients do not have to click anything) and the incorrect deadline dates for stagger 2 and 3 in the article.

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Replying to RedFive:
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By Matrix
30th Jul 2019 08:30

If there are advisers who have not signed up their clients yet then the question has to be where have they been.

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By North East Accountant
30th Jul 2019 09:16

HMRC job is to collect taxes so let's hope they can at least do their job. Ha, ha!!

Virtually 100% of our clients pay by DD as it's so easy once you file the VAT Return you can forget about it.

DD's are originated by whoever collects the money. This is HMRC so if the direct debit is not collected, this is HMRC's problem. Which we will spend ages sorting out.

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By Psychic Sue
30th Jul 2019 16:25

What happens then when a new business has waited over 6 months for AML registration so cannot register for MTD.
The whole system is rubbish and so many people are not going to get their VAT returns in

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By djtax
31st Jul 2019 11:05

...and what about those businesses who have always done their own VAT (perfectly adequately on the old system) and have not previously needed to engage an accountant. I wonder how many of them are fully aware of what is required and are fully up and running already - and how many are still in for a nasty surprise in the next few days?

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By DeeLee
31st Jul 2019 18:55

Just for your info, having submitted some MTD returns using Xero I have found the following:
- if you don’t have all your clients linked via your gateway credentials but some linked to their own, then the “grant authority” links keep breaking thus meaning you have to go through that login process every time you switch to a client with a different gateway (and enter the code sent to a mobile. Not ideal since “the mobile” is in Cornwall with no signal currently). The links should last for 18 months.
- so far no acknowledgement is given that confirms whether the payment will be taken via DD or when due as was previously received. According to Xero, this should show up on the dashboard so it may be that HMRC’s system is not generating this information yet. (HMRC didn’t know when I asked.)
- The next return can no longer be accessed immediately after submission on the VAT dashboard so you no longer have access to details of late claims coming through, or the liability on any day until HMRC’s system issues it. According to HMRC, their system will issue the new return on the third Friday following the end of the previous return qtr. so it’s not available on the dashboard until then. (I questioned whether they will be working to change this, response was “I doubt it, it’s been done like this for years and HMRC don’t change anything quickly”)
The HMRC staff that I have spoken to admit that they are having loads of MTD system problems including new ones that they hadn’t even considered and they all hate it.
Mmmm

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Replying to DeeLee:
RedFive
By RedFive
31st Jul 2019 19:48

Rowlocks.

That’s Xeros fault not hmrc. Or yours.

The second you submit an MTD return the next obligation date is available.

This can be proved via logging into the clients BTA or using software like EasyVat.

In QBO the next quarter appears immediately.

Under MTD the very second after the return is submitted it appears in full in the clients BTA, with the next obligation (stagger) shown.

There are a lot of myths, lies and incompetence displayed by the vat helpline. Don’t believe them.

Lots of any answers on AWeb if you search.

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Replying to RedFive:
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By DeeLee
07th Aug 2019 19:59

Therein lies the problem. It is no longer clear where a problem does lie and everyone blames each other.

Edit... And a further response from Xero.

“When your Xero organisation is connected to HMRC, the information in the VAT overview screen (and the open VAT period detail that shows in the Needs Attention section) is supplied by HMRC.
This means that you will need to contact HMRC directly to resolve this.”

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By pauljohnston
06th Aug 2019 08:19

Redfive - I take exception to your open comment "We’ve had 4 months to sign up the first mandated clients. If you’ve waited until now for those then more fool you. "

We have been battling with HMRC since May to get an account opened for us so we have not been able to get clients even set up. You were fortunate many are not this forum is about helping not critising unless it is really earned.

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By EnglishRose
07th Aug 2019 17:54

None of this is persuading me to buy software and register. I am going to try to ride out the storm even if I have to pay a fine for a year and then see how it goes.

I don't pay by direct debit as not keen on those but it sounds like HMRC's bank account has changed or has for MTD anyway. I hope they make that really clear as I have their current details saved on my on line banking and would otherwise have just used those to make a payment.

My impeccable paper records which are never lost and cannot be hacked meanwhile are going very well. They cost zero in on going fees.

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Replying to EnglishRose:
RedFive
By RedFive
07th Aug 2019 18:15

When you go down to the shops do you pay in Groats, or just barter ones own sheep?

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By Psychic Sue
11th Aug 2019 13:40

As a new Company I applied for AML back in February and still waiting. In the end had to sign client up himself to MTD and submit under clients name. Just Crazy

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