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How to submit Making Tax Digital VAT returns for clients

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Making Tax Digital (MTD) came into effect on 1 April 2019 and for accountants, it means the majority of your clients’ VAT returns should now be submitted using software, and that VAT accounting records must be kept digitally.

Accountants who file returns on behalf of their clients need to do so via MTD-compatible software, and need to make sure their clients not only have MTD-compatible software but follow the MTD rules on data retention.

Accountants will also need a new government online account called an Agent Services Account (ASA). The ASA is separate from the Government Gateway login that you might already have and from your existing HMRC online services for agents account.

Your practice will only need a single ASA, regardless of the number of clients you have. Because of this, HMRC suggests the ASA should be set up by a director, owner or lead partner.

Need to submit VAT returns for clients? Read this to learn about the ASA and how to register for one, how to add existing or new clients to MTD for VAT, and filing deadlines to be aware of.

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What is an Agent Services Account?

As a professional tax agent firm, you need an ASA to access HMRC online services such as Making Tax Digital, and to be able to use software to communicate directly with HMRC to:

  • Submit VAT returns as part of HMRC’s Making Tax Digital
  • Change your clients’ business details for VAT
  • Send Income Tax updates as part of HMRC’s Making Tax Digital pilot
  • Register a trust online
  • Register an estate online for someone who has died.

HMRC says this list of features will be updated over time as more online services become available.

Requirements for creating an Agent Services Account for MTD for VAT

Before you create your ASA, it will help to have all of the following information to hand.

You will need the Unique Taxpayer Reference (UTR) for your practice if you are self-employed or a partnership, while a limited company will need the Corporation Tax Reference number. You’ll also need the postcode associated with that reference.

Additionally, you’ll need your anti-money laundering supervisory body details, including the supervisory body’s name, your membership number and the date your membership expires.

And you’ll need the Government Gateway ID and password that you use to sign in to your existing HMRC online services for agents (not the Government Gateway ID you use to manage the tax liabilities of your own organisation).

How to register for an Agent Services Account for MTD for VAT

Registering for an ASA can be done prior to the requirement to make any submissions for your clients. Start by visiting the sign up website and sign in with your Government Gateway ID that you use for your existing HMRC online services for agents.

Following this the procedure is very straightforward and relatively quick.

You’ll be asked to identify the nature of your business registration (sole trader, limited company, etc), and then invited to input the details mentioned earlier.

The next screen will show the details HMRC holds about your practice, and you’ll be asked to confirm they’re correct.

If there are errors, you’ll need to contact HMRC separately to request a correction. If the details are wrong, you may have entered some incorrectly earlier, so should try again.

At this point, you might be told you need to create a new Government Gateway account just for use with your ASA, and you’ll be prompted to do so by providing:

  • Your name
  • The name of your organisation
  • An email address.

Notably, this email address should be one that members of your practice are able to access so they can interact fully with the ASA in the future.

You’ll be shown your new Government Gateway user ID, as well as your Gateway Agent ID. Make a note of both because you will need them in future to login to your ASA.

Once you’ve made a final confirmation that all your details are correct, you’ll be shown your Agent Services Account reference number (ARN).

Again, make a note of this because it will be the credential you use when filing MTD VAT returns for clients.

Read more about Making Tax Digital


Adding existing or new clients to MTD for VAT using the Agent Services Account

There are practical considerations to consider when you link clients to your Making Tax Digital for VAT account, and these are discussed later. Here we discuss the actual steps required to link clients in your new ASA.

The first step is to log into your ASA.

For your existing clients, you’ll need to migrate them across from your HMRC online services for agents account. To do so, click the entry that reads “link your current self-assessment and VAT clients to this account”.

You’ll then have to enter the Government Gateway ID you use for your HMRC online services for agents, not the Government Gateway ID you use to login to the ASA.

After a handful more steps, the client accounts will then be switched to your new ASA.

If you used several Government Gateway IDs formerly to submit VAT on behalf of your clients, you’ll need to repeat these steps and login with the different Government Gateway ID(s).

To link a client that’s new to your practice, select “ask a client to authorise you”. You will need to supply the client’s VAT registration number, and the date they registered for VAT. (Note: You might also see an option to link clients for income tax, which applies only if your practice and the client are enrolled on the MTD for Income Tax pilot programme.)

You will need to select the software the client is using (select the Sage Business Cloud option if they’re using Sage Business Cloud Accounting or Sage 50cloud Accounts, for example).

Once you’ve entered the client’s details, they’ll be sent an authorisation email. They must open and click the link within 14 days. If prompted, you must accept the terms and conditions on behalf of your client.

Once the client is signed up to MTD, you need to wait up to 72 hours to receive confirmation from HMRC that you can start using MTD-ready software to make submissions.

Your accounting software may include functionality to show you a list of clients registered in that software. However, there is currently no service that lets agents or software pull a list of clients that HMRC has registered against an ASA.

Considerations when signing up clients for MTD for VAT

Needless to say, there’s significant work any practice must undertake surrounding Making Tax Digital outside of the actual processes of signing up to HMRC’s new systems.

Your own software systems will need to be updated so they can make MTD submissions, and your staff will have to be educated on how to use them. You will need to link the software to your new ASA account, of course.

Your clients will need to learn about MTD and the requirements it places upon them even if you file their VAT returns for them (especially with regard to the digital storage of VAT records).

You will want to educate them before you attempt to link their VAT reporting to your ASA so that the email they receive from HMRC doesn’t come as a surprise, or they don’t ignore it, and you’ll need to ensure you understand the implications.

The client will need to upgrade to MTD for VAT-compatible accounting software if they haven’t already done so because you will need the name of their MTD for VAT-compatible software (for example Sage Business Cloud) when linking them to your ASA.

Timing is important when it comes to signing up clients for MTD for VAT. It can’t happen until the filing deadline for their final non-MTD return has passed, and there are different rules for clients that pay by direct debit, and those that pay by other means.

The following deadlines need to be used by your practice, and also communicated to your clients so they’re prepared in time:

  • If your client pays by direct debit, you must allow five working days after the filing deadline for their final non-MTD return before signing them up for MTD for VAT, and you must allow at least seven working days before the filing deadline to file their first return under MTD.
  • If the client pays by non-direct debit methods, you must allow 24 hours after their last non-MTD return before signing up, and 72 hours after signing up before filing their first return under MTD.
  • If the client VAT return was filed late, and they pay by direct debit, you must allow five working days after filing late before signing them up. If they pay by non-direct debit methods then, as above, you must allow 24 hours before signing them up if they’ve filed their VAT return late.

Editor’s note: This article was first published in April 2019 and has been updated for relevance.

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