Making Tax Digital: The HMRC perspectiveby
As part of a half-day event to support small to mid-sized accounting firms with their Making Tax Digital strategy, HMRC’s Clare Sheehan addressed some of the most commonly asked questions.
Sheehan, HMRC’s director of MTD for Business, confirmed that only VAT-registered businesses with a turnover over the threshold are required to join this first stage. Full details for accountants can be found in ‘VAT Notice 700/22: Making Tax Digital for VAT’.
However, she went on to mention that there’s a small group that won’t have to join until on or after 1st October. The full list is accessible on gov.uk and include local authorities, trusts and traders based overseas.
Sheehan said that HMRC’s vision for MTD was originally based on dedicated software. After consultation, however, it will now permit the use of spreadsheets or bespoke software, provided that bridging products are used as well. Bridging software pulls data from spreadsheets and sends it directly to HMRC.
So which software packages are compatible with MTD? Sheehan said there were now around 130 MTD-compatible software products listed on gov.uk. A filter is now live on the site to enable you to find the most appropriate software for your needs, or alternatively AccountingWEB’s software reviews page lists products flagged to us by readers as appropriate for accountants.
There are four practical steps you need to take, said Sheehan. The first is to set up an agent services account – just one is needed per practice. This goes wider than just MTD and allows you to interact with other HMRC services.
Next, you need to link clients to your agent services account, then sign them up to Making Tax Digital. Finally, you need to authorise your software to work on behalf of those clients, she said.
“If you have clients under multiple government gateway IDs, you just follow that step multiple times. It’s not sufficient just to map clients over” said Sheehan, “you also need to sign them up to Making Tax Digital. We’ve created a step-by-step guide giving sources of further information to help you with the different stages.”
Questions from the audience included:
Q: I have clients I haven’t authorised for VAT – they’ve done it themselves. Is HMRC geared up to receive a lot of 64-8 authorisations?
A: You won’t need to go through the 64-8 process as you know it. Once you’ve set up an agent services account though the HMRC portal, you can put in their details and generate an email to send to them. All this done is done without having to send any paper in - it’s a digital version of the 64-8 process.
Q: I’ve got clients who are on annual accounting. Are they still required to file now [for MTD for VAT]?
A: They are part of the group that we’ve deferred – they will be required to join MTD for VAT but not until the period starting on or after 1st October.
Finally, addressing the future of Making Tax Digital when it comes to other forms of taxation, Sheehan stated that any future roll-out of MTD for income tax and corporation tax will depend on how well the VAT system works.
Taken from the AccountingWEB Presents event in London, watch QuickBooks’ Customer Trainer Richael O'Brien demonstrate two MTD for VAT solutions – eFiling and Bridging Software. Showcasing their differences, she shows how both ways are compliant and simple to submit to HMRC for MTD. View the full videos here.