Agent VAT authorisation is changingby
From October 2023, agents will no longer be able to copy their client's authorisation from their online services for agents account to the newer agent service account. Instead, they will need to obtain new VAT authorisation for existing clients, even if they are already authorised to deal with their filings.
Since Making Tax Digital (MTD) for VAT was extended to all VAT-registered businesses on 1 April 2022, agents have been required to use their agent service account (ASA) to manage their clients' VAT filings. This is a separate system from the more familiar online services for agents account (OSAA) which agents still use to manage other taxes, including corporation tax, on behalf of clients.
Migration to the ASA for VAT
Any parent who has committed the cardinal sin of washing their offspring's cherished favourite teddy – indulge me – can attest that humans are inherently resistant to change, particularly where a new system (clean teddy) is teasingly similar yet frustratingly not quite the same as the (familiar but grubby) one we're used to. And much less so where there appears to be very little benefit to the change.
Feedback from agents suggests that the ASA is less user-friendly than the OSAA and many are not bothering with it at all, opting instead to log on to clients' personal tax account (PTA) as reported in AccountingWEB earlier this year.
However, one way to slightly ease the administrative burden of transitioning clients from one platform to another is that, until now, agents have been able to copy existing authorisation for VAT from the OSAA to the ASA without involving the client. This function is set to be withdrawn from next month, as communicated to agents via edition 111 of HMRC's Agent Update.
New digital handshake
From October, agents will need to obtain new VAT authorisation in their ASA for existing clients, even if they are already authorised to deal with the client's VAT filings in their OSAA. They will do this using a 'digital handshake' – the agent generates a link in the ASA that is sent to the client to authorise, giving the agent access to digital, phone and written services for VAT on their behalf.
Any new clients must be set up for VAT on the ASA and authorisation requested in the same way.
Clients who are digitally excluded and unable to accept the digital handshake themselves can contact the relevant HMRC helpline who will make a referral to a specialised team. A member of this team will then contact the customer, confirm their identity, go through the consent wording and authorise the agent on their behalf. The agent needs to have set the client up on their ASA and generated the authorisation link in advance of this call.
An HMRC spokesperson said: “This legacy process is being removed as we now have digital processes in place to make authorisations more secure.
“We have communicated this to our agent community through various channels, including the professional bodies representing them.”
MTD ITSA is safe, for now…
Self assessment is the latest tax to be migrated from the OSAA to the ASA, in preparation for the launch of MTD for Income Tax Self Assessment (MTD ITSA), with HMRC stating on the GOV.UK website:
"From 2 August 2023, you must have an agent services account if you are a tax agent and you want to:
- submit Income Tax or PAYE repayment claims on behalf of others
- charge a fee for doing this".
The good news is that (for now at least) the option to copy authorisation for income tax across from the OSAA to the ASA will remain in place. But presumably, its days are numbered too.
Sensible agents who want to get ahead of this change and save themselves and their clients an HMRC-induced headache will be furiously copying across as many VAT (and probably income tax to be on the safe side) authorisations as possible over the coming weeks before the option is withdrawn.
In a period of flux and unpredictability as HMRC ploughs on with its increasingly delayed and much-maligned MTD project, it seems ludicrous to remove one of the more sensible, practical abilities of the system. Something as simple as being able to transfer authorisation from the old system to the new is perhaps a step too far in the right direction. Time to take two back.
*12 September 2023: This article was amended to clarify the date MTD for VAT came into force for all VAT-registered businesses.
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Consulting Tax Editor for AccountingWEB.
I have spent the last 10 years teaching the accountants of the future, mainly ICAEW advanced level corporate reporting. I also cover tax news and write and edit tax updates for other publishers including PTP Limited.