On Wednesday 29 August, during a three way video conference with HMRC and his software supplier Clear Books, David Cuthbertson of Shilton Accounting Services submitted his first VAT return within the Making Tax Digital pilot testing programme.
As part of work on its latest MTD-compatible products, Clear Books designed and tested the VAT filing mechanism in HMRC’s quarantined “sandbox” environment. After final testing, the application received its pilot filing credentials from the tax department in May.
Then the search was on for suitable candidates that met HMRC’s test criteria, which is where David Cuthbertson’s firm came into the picture.
“We’re great Clear Books fans,” said Cuthbertson. “They contacted me and said they’d identified a particular client who was suitable for the pilot programme and asked if I would consider doing it. I was up for giving it a whirl.”
Simple client scenario
The client in question is a fairly new one-person limited company that uses cash accounting, which posed few complications for VAT filing, the accountant said.
The first step towards the test filing took place a week or so beforehand when Cuthbertson set up Shilton’s agent service account. Initially, he couldn’t see the client online.
“When you set up the agent’s account, it’s a completely new government gateway account. There’s a follow-through process to take your client from the old system to the new, but HMRC didn’t seem to trace my entry first time,” said Cuthbertson.
“We did it again and it worked fine. The client wasn’t really involved because their authorisation was carried over from the previous system.”
MTD for VAT step-by-step
After that minor drama, Cuthbertson was ready to prepare and submit the return from Clear Books. This is how the sequence happened:
Step 1: Create a VAT return in Clear Books
The software preselects invoices for the quarter, allowing the accountant to review the VAT return:
Step 2: Review and finalise the return
The accountant then reviews the draft return to ensure the data is correct and free of any errors:
Step 3: Submit to HMRC
Once the data is selected and reviewed for completeness, submitting it is a single click command, just as it is for the existing VAT system. Within the new process, HMRC will email a receipt number for successful submissions to the agent:
Clear Books told AccountingWEB the MTD submission functionality had been hidden from users until Wednesday. “Shortly before the submission we switched this functionality on for David and all of his clients. This meant he could see the VAT return menu item in the Clear Books interface and access the three-step return process,” the developer explained.
“The system is designed so that we can toggle David back to the old version of MTD VAT returns in need. Being part of the pilot programme, however, he will continue to submit using the MTD functionality.”
Cuthbertson says he is not particularly techy but found the whole process was “incredibly simple”. Harking back to the problems surrounding real time information, “It was not like that,” he said.
“We’ve got a lot of clients on bookkeeping systems. It’s nice that we won’t have to worry about our Clear Books clients. I would be happy to try some more.”
Shilton also has clients running Sage 50 and is planning to move them onto Sage Business Cloud, but has not yet started to test that set up. “The difficulties will be with the once a quarter shoebox guys and margin schemes,” Cuthbertson continued. “As far as I can see at the moment, there’s no facility to deal with that.”
In spite of those challenges, his advice to other practitioners considering the MTD for VAT pilot is to “go in and have a go".