Now the MTD for VAT pilot is open to a large number of VAT-registered businesses, you need to know how to sign up clients for MTD, and what the client has to do.
MTD is a steep learning curve for everyone involved: software providers, tax agents, businesses and the HMRC staff. There is no MTD reference manual, so we are all feeling our way along.
What makes life more difficult is that the MTD project is being developed using the “agile model”, which encourages a rapid and flexible response to change. This means the MTD processes are still being tweaked, which is leading to confusion as conflicting messages are distributed by HMRC, the software developers and the professional bodies.
The latest confusion surrounds the processes needed to sign up a client to MTD for VAT. Back in June 2018, we were told that clients would have to access their Business Tax Account (BTA) in order to sign up to MTD for VAT, and HMRC has reiterated this message in its webinars.
HMRC has now clarified that an existing client of a tax agent won’t need to access their BTA, as the agent can sign them up for MTD for VAT. The process will work like this:
1. Set up your Agent Services Account (ASA).
2. Link your MTD software to your ASA.
3. Link your list of clients to ASA via your government gateway.
4. Signs up clients through MTD software, to MTD for VAT.
Let’s look at each of those steps in more detail to tease out the pitfalls.
Step 1: Set up your ASA
The key to operating MTD as a tax agent is your ASA. This needs to be set up before you can file anything for your clients under MTD. The process of getting an ASA may not appear logical. As MTD is a new tax filing system, which will run in parallel to the current filing system, the existing login functions are duplicated.
Have the user ID and government gateway password you normally use to sign in to HMRC online services as an agent to hand and be ready to note down a new reference number. You also need the UTR number for your business and the postcode associated with that UTR number. Only one ASA can be set up for each legal entity as it is tied to the UTR number for your business.
As part of this process, you will get a brand new government gateway user ID and password. Keep this separate as it will only be used for MTD. Do not mix it up with your old government gateway credentials as you still need those for dealing with non-MTD tax returns.
Step 2: Activate MTD-enabled software
You can’t go any further without your MTD-enabled software, so talk to your software provider. You need to link your shiny new ASA to your MTD-software, and that can only be done from within your MTD software.
Step 3: Link clients to your ASA
This is done from within your ASA. Note this step does not sign up clients to MTD, it only links them to your ASA, through which will manage the MTD filings.
To get into your ASA you need to use the new MTD government gateway login page, not the old government gateway you use for your non-MTD work. These two login pages look identical but they go to different places in the HMRC system – thanks to practice owner and AccountingWEB member Chris Maslin for finding this out the hard way and sharing his experience with me.
If you have several government gateway accounts for your firm, perhaps one for each office, this linking process must be performed for each government gateway account.
You will NOT see a list of the clients you have linked to your ASA, as this information is only displayed by your MTD software. If you plan to use several different MTD-enabled software products to suit different clients, this will cause you an administration headache.
At present, it is only possible to link clients that have authorised you to act using the online authorisation process. It is not yet known how clients that authorised you to act using the paper 64-8 process will be linked into the ASA.
Step 4: Sign up clients to MTD for VAT
Do not sign up clients for MTD for VAT until they are totally ready to file under MTD, as once signed up you can’t easily go back and file VAT returns under the old system for that client. It may be possible to opt out of the MTD pilot, but how that may be achieved is not clear yet.
At this stage, you need to do this sign-up process client by client, although when MTD for VAT comes out of the pilot stage your software may allow you to sign up a whole list of clients in one go.
There are two ways for the client to get into the MTD for VAT pilot:
1. Do it themselves using this link.
2. The agent signs them up using this link.
You need each client’s VAT number to hand. You also need to supply an email address for the client. HMRC will then email the client a link and the client must click on that link to verify the email address. This means the client must have a functioning email address and must agree to paperless notifications for VAT from HMRC, in order to sign-up for MTD.
Once within the MTD regime, the client will have to access their BTA to see notifications to file and provide a view of their VAT returns. Although your MTD-software will provide that information, so if the client trusts you to handle all the VAT admin, they won’t need to access their BTA.
In the future, new clients will need to authorise an accountant to act for them through the BTA.
About Rebecca Cave
Consulting tax editor for Accountingweb.co.uk. I also co-author several annual tax books for Bloomsbury Professional and write newsletters for other publishers.