MTD for VAT – August 2019 update

Edition 9 of HMRC’s MTD update for agents (email makingtaxdigital.mailbox@hmrc.gov.uk if you have not received a copy) includes information on a number of MTD related matters and HMRC has provided some further details to the Tax Faculty:

Overseas businesses

Overseas businesses are in the group of VAT traders whose start date for MTD for VAT has been deferred to the first VAT period starting on or after 1 October 2019. Overseas businesses can voluntarily sign up now (all businesses except users of the VAT GIANT system can sign up to MTD for VAT).

When overseas businesses sign up to MTD for VAT they are asked for their VAT registration number (VRN) but should not be asked for the other identifiers (Company Registration Number (CRN), Unique Tax Reference (UTR) or National Insurance number) required for UK based traders. If an overseas business already has a VAT account and is being asked for anything more than a VRN it means that they are not being recognised by HMRC’s systems as an overseas business.

HMRC has advised that where there have been issues it has either been because the business is choosing an incorrect entity type, they are not actually an overseas business (and should be UK registered) or the data they are providing during sign up doesn’t match HMRC’s records (often dating back to the way the initial VAT registration was set up).

HMRC is considering a system fix to enable more overseas businesses to sign up without having to contact HMRC to get their record corrected.

Opting back out of MTD for VAT

HMRC has now introduced the functionality to allow businesses with taxable turnover below the VAT threshold that voluntarily signed up to MTD for VAT to opt back out. Agents can access this service from Manage your client’s details for MTD for VAT (use agent services account credentials to log in).

Businesses should only opt out where they signed up voluntarily; businesses whose taxable turnover falls below the threshold after they are in MTD for VAT must continue to comply unless and until they deregister.

Businesses that opt back out are not moved back to the old VAT system but use a new online VAT return. Agents can file returns for clients that have opted back out of MTD from the same link.

Agents can now view client’s VAT certificates

Agents can now view VAT certificates for clients in MTD from Manage your client’s details for MTD for VAT.

The full list of services available on this link is as follows:

  • change a client’s business name if they’re a limited company
  • update a client’s principal place of business
  • view a client’s VAT certificate
  • change a client’s VAT return dates
  • cancel a client’s VAT registration
  • opt a client out of MTD for VAT
  • submit VAT returns and view return deadlines for clients opted out of MTD for VAT

The Tax Faculty has made representations to HMRC that these services should be available directly from the agent services account.

HMRC communications

HMRC has been sending reminder emails to businesses that it believes should have already signed up to MTD for VAT, or should do so shortly, but have not done so.

HMRC is now sending letters to monthly and stagger group one filers who had not signed up to MTD for VAT in time for the 7 August filing deadline.

HMRC cannot determine with absolute accuracy which businesses are within the scope of MTD for VAT and so some businesses will receive letters even though they are not required to comply. If a business or their agent contacts HMRC to inform them that the letter is incorrect it is not clear whether HMRC is able to capture this information and prevent further such correspondence.

The Tax Faculty has received reports of businesses receiving these letters even though they are in the group deferred to October and have received a letter confirming the deferral. There is no obligation to notify HMRC but any business that is relying on the deferral to October must contact HMRC if they have not received written confirmation of deferral.

Further information is available on www.icaew.com/mtd. The Tax Faculty would welcome feedback on MTD - please email carolinemiskin@icaew.com.

Anonymous
  • My client is in the defer to October group and when I chased HMRC for the confrimation letter, they stated that it had been sent to my client months ago. We asked for a copy of the letter to be sent, and received a letter with a pro forma deferral letter attached. The deferral letter had no client name, address or vat number, so not sure how HMRC expected the postal system to have delivered the original.