ICAEW's Tax Faculty provides step-by-step guides on how to sign up for Making Tax Digital VAT (MTD VAT) and MTD income tax self assessment (MTD ITSA) for businesses and for tax agents.
The sign-up process for MTD VAT was decommissioned in November 2022 when HMRC transferred most remaining businesses to MTD VAT. HMRC did not automatically sign up:
- businesses that have applied for or agreed a digital exclusion exemption, or
- annual filers (who will be signed up automatically in May 2023)
Businesses registering for VAT are now signed up automatically to MTD VAT as part of the registration process. If a business intends to claim a digital exclusion exemption, they should ask HMRC to switch on the online VAT return, so they have access.
Businesses that file their own MTD VAT returns still need to:
- understand the MTD VAT requirements
- agree responsibilities with any third party bookkeeper or agent
- choose and authorise MTD VAT software
Authorising MTD VAT software
Before a VAT return can be filed from MTD VAT software, the software must be authorised to communicate with HMRC systems. This process is initiated from the software product. It will look slightly different in each product. The process involves:
- entering the businesses’ government gateway user credentials into the software
- providing additional details including setting up 2SV (two step verification)
The software will require reauthorisation periodically - at least every 18 months but sometimes more frequently. If you have a problem with this step check with your software provider.
In addition to the steps for businesses agents also need to:
The link to set up an agent services account (ASA) and the associated HMRC guidance is available on gov.uk: Create an HMRC agent services account.
Once the ASA has been set up, subsequent access is via Sign in to your agent services account using the new government gateway user credentials that were allocated when the account was set up (not the credentials that were previously used for agent access).
Setting up the ASA can and should be done as soon as possible. Some firms will have set up an ASA to use other HMRC agent services and will already have the ASA credentials they need for MTD VAT.
Once the ASA has been created, agents can use a service in the ASA to link existing client authorisations to the ASA. The service "link your current self assessment and VAT clients to this account" creates a dynamic link between the ASA and the existing government gateway agent credentials. The purpose of this step is to ensure that existing client authorisations are recognised for transactions available through the ASA and from MTD software, without the need for reauthorisation. The agent will receive an "account linked" message but will not be able to see a list of clients in the ASA.
If a firm has more than one set of government gateway agent credentials this step will need to be completed once for each set of credentials.
For new VAT clients, agents should request authorisation using the new VAT authorisation service in the ASA.
MTD ITSA - sign up guidance
At this stage of the MTD ITSA pilot it is not possible to sign up directly from gov.uk. Those interested in joining the pilot should instead contact the recognised software provider they intend to use.
Further information on MTD ITSA:
This guidance is created by the Tax Faculty, recognised internationally as a leading authority and source of expertise on taxation. The Faculty is the voice of tax for ICAEW, responsible for all submissions to the tax authorities. Join the Faculty for expert guidance and support enabling you to provide the best advice on tax to your clients or business.
- 01 Dec 2022 (12: 00 AM GMT)
- Updated to reflect decommissioning of MTD VAT sign up process as HMRC automatically signing up businesses.