Making Tax Digital: No penalty for missing first filing
Businesses that missed the deadline for signing up for MTD, so can’t file their VAT return using MTD software, won’t be penalised as long as they file the VAT return on time using the old HMRC portal.
This information was provided in an email to tax agents from HMRC’s MTD for Business Customer Readiness & External Stakeholder Team, sent 1 August. The full statement says:
“If you have clients that pay by direct debit the sign-up window has closed for the 7 August. Do not worry we won’t penalise them this time, so file the old way and come back when the DD has been collected to sign up in time to file the next return. Although we will not penalise them, they will receive a letter from us telling them that they missed the deadline and asking them to take action.”
This will be a big comfort to the thousands of tax agents who have been waiting for the confirmation of MTD sign-up to arrive from HMRC. This email is supposed to be issued within 72 hours of a successful MTD sign-up. However, there is currently a delay in sending out these emails so it may take a little longer than 72 hours to receive the confirmation.
Accountants have also been struggling with a range of MTD-related issues, not least with the Agent Services Account (ASA). HMRC acknowledges that there have been teething problems with the ASA, and the communication around what the ASA does has been confusing.
HMRC is running an extra webinar on the ASA at 2pm on Monday 5 August. The presenters will try and answer as many questions as possible about the ASA during those webinars, both orally and as written answers.
Some of the confusion is rooted in the assumption that the ASA would be the agent’s equivalent to the Business Tax Account (BTA). It is not.
The BTA is a dashboard which businesses use to manage all of their HMRC taxes (corporation tax, VAT and PAYE). The BTA allows the business to view upcoming tax liabilities, any penalties issued, and change permanent information about the business such as address or VAT stagger periods.
The ASA, in contrast, currently has very limited functionality. More features are being added all the time, although sometimes you have to take a back door to get to them (see the managing clients’ VAT records section below).
All in the software
The design of MTD is based on the premise that all tax agents will use sophisticated MTD software that pulls information in from HMRC’s systems and displays it in a way which is useful to the agent. This means that much of the information which is available to your clients through their BTA is not available to you, unless your MTD-software provides it for you. Some of these applications can be found by filtering the list on AccountingWEB’s MTD software comparison table.
Top of the list of gripes by tax agents is that the ASA does not show the complete list of clients linked to the ASA or signed up to MTD. The professional bodies have been pushing HMRC to develop this functionality, but so far the ASA will only show the number of client authorisations which have been copied over from the old HMRC online services to the ASA.
Incidentally, the term “linked to the ASA” has been changed to “copied to the ASA” to make it clear that clients’ information held by HMRC remains on the old HMRC online systems, although it has been copied to the ASA. The data that HMRC holds for each client should not get out of sync, even if the VAT liabilities are manged through MTD, and its PAYE and CT liabilities are not.
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Managing the VAT return
Second in the chart of MTD moans is that the tax agent doesn’t get a confirmatory email that the VAT return has been received by HMRC’s systems. This is another feature which the MTD designers assumed would be provided by the MTD software. However, not all MTD software is providing this automatic confirmation.
Your client should be able to see whether the VAT return has been received by checking their BTA, but the MTD system doesn’t send a confirmation email to acknowledge receipt of the VAT return, as happens when submitting a VAT return through the old HMRC portal.
If you want to print the VAT return to have a permanent record of what has been submitted, this also must be done through the MTD software.
Managing clients’ VAT records
This is a back-door into the ASA, which allows the tax agent to update certain information about each client’s VAT status. You can use this feature to:
- Change the VAT registration status, including cancelling the VAT registration
- Change the business name if the business is a limited company
- Amend the address of the principal place of business
- Change the VAT stagger period or change from monthly to quarterly filing
You need the user ID and password for your ASA and information about the business for which you want to change details.
Note, you do not go to your ASA directly, but must use the link on this page.
Not enough pilot
Many of the problems outlined above are process issues, which HMRC and the software developers are trying to solve. They are simultaneously trying to solve all the small niggles which arise from rolling-out the live system.
If MTD had been put through a longer pilot period, as all the professional bodies asked for, we would not be in this position of worrying about late filings because of processes breaking down.
Consulting tax editor for Accountingweb.co.uk. I also edit Bloomsbury's Tax Rates and Tables and write newsletters for other publishers.