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New VAT portal leads down ‘rabbit hole of pain’

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The way agents can register their clients for VAT online has been updated, but in doing so HMRC has launched a process that is inherently broken.

16th Aug 2022
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HMRC updated the way agents can register their clients for VAT online from 1 August 2022, stating that the new process had been tested by “industry”. However that industry clearly wasn’t accountancy, because the process is poor and confusing. The objective was to improve VAT registrations, making them quicker to apply for and for HMRC to process.

HMRC published no guidance or explanations, either prior to or just after the launch, and this has left tax agents struggling with a poor user interface and glitches that have meant longer times are needed to submit an application. Not so simple after all.

The big issue 

To use the new VAT registration online process, the agent must use their Making Tax Digital Agent Services Account (MTD-ASA) government gateway details. The problem with this is that once logged into the ASA, there is no option to register a client for VAT, the ASA only allows you to file VAT returns for those clients who have subscribed to MTD.

If the agent uses their “old” ASA, there is an option to register a client for VAT, but that takes you down a rabbit hole of pain. Because if you enter the VAT registration pages via your “old” ASA, then the screens will require the agent to identify themselves by providing their name, date of birth and national insurance number. The agent will also have to supply evidence to support these answers, such as passport or driving licence.

The solution

Before logging in, you should use this link titled “VAT registration applications, exceptions and changes”. The first menu option on this page is “Use online services to apply for VAT registration or to change your VAT registration details”.

Once you click on that, you are taken to the familiar government gateway login page and you login using your MTD ASA credentials. Doing it this way, you are then taken to the VAT registration pages but this time, it only asks for your name and accountancy practice name.

Other issues yet to be resolved 

This fully tested service has a number of inherent issues which one hopes HMRC will look to resolve very quickly. The VAT Practitioners Group (VPG) has been leading the discussions with HMRC on a number of other issues.

If your client is an “intending trader” – which is usually a corporate spin-off that isn’t planning on making any sales for a while, such as a property developer – HMRC appear to have an algorithm that denies registration if the intending trader isn’t intending to trade for at least three months from date of registration. This is not what the UK VAT legislation states, but is what HMRC appear to be doing.

There is an ability to save your progress and return to it later. However, your answers are only stored for seven days (on the previous online process it was 30 days). In my own experience, I’ve also noted that it does not remember all of your answers. It remembers yes/no buttons but any free-form fields it does not. Your autocomplete function in your browser can be useful here but over time, you’ll have hundreds of autocomplete responses to choose from.

Backwards step

Also, where HMRC requires a passport (if there’s an overseas director) or an option to tax form, these cannot be submitted via the online process and instead have to be emailed or posted once you have submitted the registration and obtained a reference number. The old process allowed you to upload documents, so yet another backwards step.

One final and serious issue is that where the client is overseas/non-UK, HMRC requires the tax agent to act as a tax representative. A tax representative has joint and several liability for any VAT owed by the taxpayer. It is rare that any accountant would act as tax representative for any business, let alone an overseas one, but do be very careful ticking any boxes that make the practice liable for the clients inability to pay their VAT. I presume this is a coding error on the website, but if it is deliberate, it is against the law to force the tax agent to be a tax representative, although HMRC would no doubt love to have tax agents on the hook for HMRC’s VAT loss.

Final thought

It is ridiculous that HMRC has launched an online process that is inherently broken. Worse, HMRC has quickly recognised some of these issues but rather than publicise these changes on gov.uk it has agreed some interim guidance, which has been published by the Institute of Chartered Accountants in England and Wales (ICAEW) and the Chartered Institute of Taxation (CIOT) with a recent update including draft instructions on how to circumvent the agents having to give their personal details away to HMRC.

It feels like another attempt by HMRC to cut the tax agent out of the HMRC/taxpayer relationship. While many agents will be members of ICAEW or CIOT, it isn’t logical to have such important guidance on registering for VAT hidden away on a website for a niche group of people, rather than on the more obvious place, the HMRC website under their “How to register for VAT” sections.

 

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Replies (81)

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By mg200
17th Aug 2022 12:08

My additional gripes with the new system/process.

I have to request info from my client. It would be nice to see all the questions in advance to avoid me sending a dozen requests as they appear. Perhaps I could leave the NI number blank as I move on to the next page?
It doesn't seem to let me advance as my newly formed company doesn't have a UTR yet. This takes about 2 weeks and was not required before. This delays the VAT registration unnecessarily.

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By Andrewmoore777
17th Aug 2022 12:55

Jason Croke's excellent critique on HMRC's new online VAT portal deserves wider circulation. HMRC's attempts at good online software interaction are amateurish in the extreme. No good commercial company, or indeed many other strands of UK Government, would put up with such poor quality. Any commercial software developer who delivered what HMRC delivers would be out of the door very quickly.

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By Andrewmoore777
17th Aug 2022 12:55

Jason Croke's excellent critique on HMRC's new online VAT portal deserves wider circulation. HMRC's attempts at good online software interaction are amateurish in the extreme. No good commercial company, or indeed many other strands of UK Government, would put up with such poor quality. Any commercial software developer who delivered what HMRC delivers would be out of the door very quickly.

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By Andrewmoore777
17th Aug 2022 12:55

Jason Croke's excellent critique on HMRC's new online VAT portal deserves wider circulation. HMRC's attempts at good online software interaction are amateurish in the extreme. No good commercial company, or indeed many other strands of UK Government, would put up with such poor quality. Any commercial software developer who delivered what HMRC delivers would be out of the door very quickly.

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By indomitable
17th Aug 2022 13:35

It really is appalling. Another thing on the long list of utter failures from HMRC

Tried to register a client this morning, complete dogs dinner and also asked for clients ID, never been asked that before - what a waste of time!

I suggest everyone writes to their MP, I have.

The only way to get things changed is government needs to get a grip of the civil service

Nothing works in this country anymore!

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By Jason Croke
17th Aug 2022 13:55

1. I appreciate HMRC are concerned about fraud and want to ramp up the security and perhaps want to avoid fraudsters pretending to be tax agents and submitting fraudulent applications on mass under the auspices of being an agent.

But there is no excuse for releasing a process with zero guidance. If you are going to radically change the information asked and the way in which it is asked, then at least tell people so that they don't have to waste hours figuring it out or worse, clogging up the HMRC helplines which only means HMRC are dealing with queries that could have been dealt with via a guide online.

2. If you are going to release guidance or an update, why only publish that on an obscure website such as the ICAEW website. Appreciate the ICAEW is not obscure, but it is for anyone who isn't an ICAEW member.

Besides, the ICAEW has published this document without any useful HTML tagging, so unless you type in "new VAT registration service, ICAEW", you will struggle to find the document using Google. Had this been on the HMRC website and tagged as "VAT registration", then anyone could Google it and find it. I doubt the average Accountant would think to first visit the ICAEW for guidance on how to register a client for VAT.

I'm struggling to understand why HMRC are only publishing this guidance via ICAEW/CIOT. What is the reasoning behind it?

It's why I drafted this article in the first place, because important stuff like registering a client for VAT, shouldn't be this secretive and hidden.

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Replying to Jason Croke:
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By indomitable
17th Aug 2022 15:11

" I appreciate HMRC are concerned about fraud and want to ramp up the security"

As we all know anti-money laundering legislation is a complete nonsense. All it does is puts an administrative over burden on professionals and banks that catch no-one or very few. The black cash economy is not even touched, all the big fish easily find ways around it.

The whole thing needs to be re-thought through. So what is the point? A client comes to me - I do the AML checks - he goes to the bank, they do the AML checks - He goes to the solicitor, they do the AML checks - applies for VAT registration, they do the AML checks. And so what we've confirmed your identity, your not on any sanctions list, we can trace an address.

Do they really think the people involved in money laundering cant get round this, easy to get yourself registered at an address and not live there, easy to get a false passport if you really are on a sanctions list

Come on - this is Ponty Python??

HMRC worried about money laundering, again the whole AML system has been thought up by lets just say to be kind - amateurs

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Morph
By kevinringer
17th Aug 2022 14:29

HMRC have made the following announcement on the Agent Forum:

"New VAT Registrations may not appear on the Check a UK VAT Number Service.
We are working to resolve this as soon as possible and apologise for any inconvenience."

Is there any part of the new Vat Registration Service that works? If this was the private sector, heads would roll. But not in HMRC. They are so used to appalling IT and rubbish "customer" service, that they probably think this is acceptable as they day dream about their public sector pensions.

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By JacquiMBurns
17th Aug 2022 14:53

I actually solved this conundrum by setting up a Gateway account for the client's company & applying for the VAT Registration from there by saying the company is applying for it rather than 'somebody else' such as an Agent!

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By adjadj
17th Aug 2022 14:58

" There is an ability to save your progress and return to it later. However, your answers are only stored for seven days (on the previous online process it was 30 days). In my own experience, I’ve also noted that it does not remember all of your answers. It remembers yes/no buttons but any free-form fields it does not."

This is a very basic programme design matter. It looks as if the work was specified assuming that normal usability rules would be followed [they probably would in the UK] but it was farmed out to an offshore provider who coded exactly what was specified and no more.

When the usability issues were identified it would have raised the question as to who was to pay for the correction. From the 3rd party providers perspective it had provided exactly what was asked for!

By this stage HMRC were probably out of budget and time to pay for the corrections so managers let this pile of **** go live!

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By PAMDILL
17th Aug 2022 16:29

I had the joy last week of registering my own business for VAT, it took half a dozen attempts with the pages freezing and then kicking me out, got even worse when I was asked if I was appointing an agent to file my Returns and said yes (as I was gong to file under my ASA account), that then generated a batch of emails and forms asking for my foreign trading address. ( I don't think Scotland is overseas yet)

I contacted HMRC to ask if I could change the answer and submit again yet apparently it can't be changed. So who knows what will happen with the registration.

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By Jason Croke
17th Aug 2022 17:12

...and of course the mystery remains as to what happens when you do get a VAT number for your client.

This new process automatically enrols the client for MTD, not sure how that is going to work, does HMRC send an email to both agent and client to confirm MTD has been activated?

I'll do an updated article in due course, once I've more experience of what is to come.

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Replying to Jason Croke:
Morph
By kevinringer
17th Aug 2022 19:22

What happens with a digitally excluded client? I have applied for exemption for several dozen digitally excluded clients who became mandated this year. I've just received a letter in response to the 27th one I submitted apologising for the delay but heard nothing regarding the previous 26, some of which were submitted 3 months previously. When I applied for exemption in 2019 for the first tranche I had responses from HMRC within a month for every case.

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By Geoff56
18th Aug 2022 09:48

In September 2020 (yes, almost two years ago), I appealed against a decision to refuse MTD exemption for a client. All subsequent letters and e-mails have gone unanswered, apart from a couple of "we can't find the correspondence; please re-send" responses.

Another annual accounting scheme return will be due for the client after the end of this month. By HMRC's own guidance, we should submit it under the old system because we are awaiting a decision. However, I am concerned that might trigger a penalty with all of the subsequent hassle.

I know that loads of other AWebbers have suffered very long delays also. It really is a complete and utter shambles.

If MTD ITSA goes ahead, HMRC will be overwhelmed with applications for exemption, which they will have no hope of working through before the first quarterly returns fall due.

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By JamesDS
18th Aug 2022 09:38

Am I the only one slightly horrified by the cover photo featuring a dead rabbit?

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Replying to JamesDS:
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By Jason Croke
18th Aug 2022 14:26

Is it dead?....Or is the rabbit an animal based representation of HMRC and its burying its corporate head in the ground so that it doesn't have to witness the devastation around it.....or it could be dead rabbit :)

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Replying to JamesDS:
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By Jason Croke
18th Aug 2022 14:28

Duplicate

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By codling
18th Aug 2022 12:06

I have just used the info in the article to register a company online. This became a lesson on how to waste a lot of precious time. Jason did warn that when you save and go in again certain information would not have been retained. Well, I had to go in and out several times because of the information asked for (no checklist of required info provided by HMRC, of course!!) and having to re enter references and the like was a real pain. One of the questions was "What was the last PAYE payment?" No problem I thought, I will look online as we are registered agent but, of course, the HMRC PAYE site was down at the time. I know I could have found details of the expected payment from our payroll records but this client has a habit of paying something different. In the end something that should, perhaps, have taken 10 minutes or so took well over an hour.
I had a field day with the feedback form but no doubt that will be ignored just as HMRC seem to ignore any constructive criticism.
Jason, I am quite sure I wold have been going round in circles without your article, so thank you!

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Replying to codling:
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By Jason Croke
18th Aug 2022 14:31

Glad to have helped (reduce) the frustration a little.

Yes, I did a sole trader last week as part of my experiments and got asked the PAYE question, the question asks what the last payment was and on what date, so yes, requires you having to go and check another source of information. Right pain.

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By AndrewV12
07th Sep 2022 10:22

“VAT registration applications, exceptions and changes”.

I will keep an eye out for that link.

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By HelenAshelby
22nd Sep 2022 11:01

Many thanks for this article - I have successfully managed to register a few clients now under this method, and they have received their VAT certificate in the post.

The next hurdle is getting them on our agent account to manage their VAT. The email links sent to the clients don't work when they click on them - does anyone have any ideas?

Many thanks

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By HelenAshelby
22nd Sep 2022 11:01

**Apologies I posted twice**

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By AberVAT
19th Oct 2022 10:21

Great Article if a very depressing reflection on HMRC. This is my first time trying to register a client since the change and it's painful to say the least. Glad to find this article and realise it is not just me but HMRC at their unaccountable best yet again.

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By JacquiMBurns
19th Oct 2022 14:21

Also when entering other business interests, you now need to input the UTR as well as the VAT number. If you didn't know the VAT number there was no problem leaving it blank. Now if you don't have the UTR number it asks if the company is trading. If I don't have the UTR number because, for example, they are using different accountants for some reason, how am I supposed to know?

Another REALLY BIG problem is with property companies. When you click on the link they suggest to fill in the VAT5L is links to a long form including the VAT1614A AND the 1614H whereas only one needs to be sent...and you can't even complete it because it suddently takes you to VAT Notice 742 on Option to Tax.

FINALLY, even if you are just registering a bog standard trading company & so manage to complete the new form within 2 hours, when you go to print/save a copy instead of being a neat 3 pages showing all quateions & answers sensibly using the full width of the page, it is now 11 pages long because it only uses an approx. 3 inch strip down the centre of the page. It may be petty but what about the trees? Weren't we all supposed to be going green or is that just because we are feeling sick?

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By Jason Croke
19th Oct 2022 15:17

It's depressing to see that HMRC have still not updated their agent process, I'd been reassured that HMRC were looking into all the feedback they've received via CIOT and VPG and yet seemingly nothing much has changed. Maybe they should have stayed in beta test phase a little longer rather than launching an unfit for use "service".

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By JacquiMBurns
20th Oct 2022 19:00

And why can you only include 10 other business involvements on the Applications? How are you supposed to chose them? Just had this problem today.

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By phil_stott
27th Oct 2022 14:28

I have been trying to register a client for VAT via this new link (and using our ASA credentials) for the past few weeks. Simple single director ltd co with a previous non-VAT registered sole trade and seemingly no matter what I do whenever I come to the final step of 'confirm and submit' I get the message 'Sorry this service is unavailable'. Have tried phoning HMRC and the VAT helpline says theres nothing they can do and to try online services and when I call online services they direct me back to VAT helpline. Is anybody else having this problem? for the life of me I just cannot seem to be able to register the client. Alternatively can anybody think of anything that may be causing the error message to come up (possibly if they have changed their name etc)?

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Replying to phil_stott:
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By HelenAshelby
27th Oct 2022 14:34

It may be you are being timed out. This happened to me. Have your ASA account open in another window and keep refreshing that - it worked for me!

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Replying to HelenAshelby:
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By phil_stott
27th Oct 2022 14:46

Thanks but have tried that too and it still doesn't work. I don't get any error messages about any of the data elements being wrong (e.g. name or NI number), only the final submission where it just says Sorry service is unavailable. Have tried it on different web browsers, PC and Mac, and keep hitting the same dead end.

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By Winnie Wiggleroom
27th Oct 2022 15:42

Bit confused, did one 2 weeks ago, clicked on the link through the old agent login which took me somewhere else, no issues, VAT number came through in less than 2 weeks.

Only trouble is the other one I did 2 weeks earlier seems to have gone walkies

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