MTD for VAT – current issues and practical points

As we reach the critical stage of the implementation of Making Tax Digital (MTD) for VAT, the Tax Faculty summarises below some current issues and practical points. 

Digital exclusion exemption applications: HMRC’s guidance advises that applications can be made by phone or in writing. Members have reported that the VAT helpline is requiring some applications to be made in writing rather than on the phone; given the current poor performance of the VAT helpline writing may be the better option.  HMRC has confirmed that while an application is being considered a business can continue to file their VAT returns as they do currently. 

Lack of information in the agent services account (ASA): ICAEW has published a step by step guide to signing up to MTD for agents. The ASA does not have the functionality to check whether it has been successfully linked to an agent’s current government gateway IDs but if an agent tries to link the ID again they will get a message that confirms that the account is already linked.  Likewise, there is no client list in the ASA and it is not possible to check whether clients are signed up to MTD so agents need to maintain their own lists.  

Accessing ASA agent services: Most ASA agent services are not available directly from the ASA but instead need to be accessed directly from the relevant gov.uk page. For example, clients can be signed up to MTD only from https://www.gov.uk/guidance/sign-up-for-making-tax-digital-for-vat. If an agent is having difficulty locating a service all HMRC agent services are listed on   https://www.gov.uk/government/collections/hmrc-online-services-for-agents  

VAT registration certificates: Once a business is signed up to MTD, it is not possible for agents to view VAT registration certificates either in the old agent portal or the agent services account. The VAT registration certificate is also not visible in the business tax account (or at least not where it used to be visible, clarification has been sought from HMRC). 

Setting up direct debits: Agents cannot set up direct debits online on behalf of clients; HMRC’s view that it would not be appropriate for an agent to do so. 

Authorising new clients: The new agent authorisation service available from the ASA cannot be used to become authorised for a new client unless they are already signed up to MTD for VAT. Instead agents need to use the current online agent authorisation  process for VAT. Once the client has been authorised and appears in the old agent portal they will also be authorised for MTD. The link between the ASA and the agent portal is dynamic so the new client will be recognised for MTD. The advantage of using this approach is that the client will appear on the client list in the agent portal giving the agent access to a complete client list. 

New VAT registrations: see the Tax Faculty news item about the correct process to follow.  

Systems issues: There are a number of specific issues with HMRC MTD systems, each of which is reported to affect a very small number of businesses. These include: 

  • Direct debit mandates not transferring across correctly
  • Some businesses (including some overseas) being unable to sign up, in some cases because of an insufficient ‘digital footprint’ in HMRC systems
  • Incorrect VAT return periods being set up in software due to incorrect information being fed through from HMRC systems. 

 The Tax Faculty has taken all these issues up with HMRC to seek to have them resolved. Some of the issues, such as the lack of information in the ASA, are fundamental design prolems and will not be resolved in the short term.

For further information on MTD see www.icaew.com/mtd.

For specific assistance and to provide feedback please contact the ICAEW Technical Advisory Service or join the Tax Faculty for further practical assistance (MTD contact in the Tax Faculty is Caroline Miskin).

The HMRC online agent forum  (joining instructions) is increasingly being used by agents to report MTD related issues and is also a useful source of information.    

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