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Signing up for MTD

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Published: 19 Mar 2019 Updated: 26 Sep 2022 Update History

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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.

MTD VAT - sign up guidance for businesses

Businesses that file their own MTD VAT returns need to follow the preliminary steps of understanding the MTD VAT requirements, agreeing responsibilities with any third party bookkeeper or agent and choosing MTD VAT software.

Once these steps have been taken, there are two specific extra steps to be completed to implement MTD VAT.

These are:

  1. Sign up to MTD VAT at the correct time
  2. Authorise the businesses’ MTD VAT software

1. Sign up to MTD VAT at the correct time

Each business needs to sign up individually to MTD VAT. HMRC does not automatically transfer businesses from the old VAT system to MTD VAT. Businesses that register for VAT using the new VAT registration service (VRS) sign up to MTD VAT as part of the registration process.

The sign up process can be initiated either by a business or by their agent – where there is doubt, agree where responsibility for completing this step lies. Businesses can sign themselves up from Charge, reclaim and record VAT: Sign up for Making Tax Digital using their existing government gateway user credentials or can create a government gateway ID during the process if they do not already have one.

The timing of this step is critical – it is the point of no return. A business should not sign up to MTD VAT until all its non-MTD VAT returns have been filed. Once a business has been signed up to MTD VAT it will not be possible to file any VAT returns through the online VAT return.

Allow at least 24 hours after submitting the last non-MTD VAT return before signing up (more if payment is made by direct debit – see below). HMRC will send immediate acknowledgement and will follow this up with an email (usually within 24 hours, but it can take up to 72 hours) confirming that the business can now use their MTD software to file a VAT return. Do not attempt to file the first MTD for VAT return until the confirmatory email has been received.

Those that pay by direct debit have a more restricted time period in which they can sign up, due to the impact of banking regulations. Where payment is made by direct debit the business should not sign up in the five working days after the submission deadline for the last non-MTD VAT return and must sign up at least seven working days before the first MTD VAT return is filed. Do not sign up until the direct debit payment for the last non-MTD period has cleared.

If you have a problem with this process HMRC recommends using the ‘Get help with this page link’ on the gov.uk page where the problem arises. This will raise a ticket with the relevant HMRC helpdesk which will respond with specific assistance. The alternative is to phone the VAT helpline on 0300 200 3700 or the VAT online services helpdesk on 0300 200 3701.

2. Authorise the businesses’ 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 and 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.

MTD VAT - sign up guidance for agents

Agents who provide MTD VAT services to clients need to follow the preliminary steps of understanding the MTD VAT requirements, agreeing responsibilities with clients and choosing MTD VAT software. Once these steps have taken there are four specific processes to be completed to implement MTD VAT:

1. Set up the firm’s agent services account

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. 

2. Link the firm’s existing agent credentials to the ASA

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.

Linking the firm’s existing agent credentials to the ASA can be done as soon as the ASA has been set up. There is no reason to wait as the dynamic nature of the link means that subsequent authorisations/disengagements made through the existing agent portal will be recognised for services available through the ASA and MTD software.

3. Sign each client up to MTD VAT as they are ready

Each client needs to be individually signed up to MTD VAT. HMRC does not automatically transfer businesses from the old VAT system to MTD VAT. New businesses that register for VAT using the new VAT registration service (VRS) sign up to MTD VAT automatically as part of the registration process.

The sign up process can be initiated either by a business or by their agent – where there is doubt, agree where responsibility for completing this step lies. Agents can sign clients up on Sign up your client for Making Tax Digital VAT using the government gateway user credentials that were allocated when the ASA was set up (not the credentials that were previously used for filing VAT returns). 

The timing of this step is critical – it is the point of no return. A business should not be signed up to MTD VAT until all its non-MTD VAT returns have been filed. Once a business has been signed up to MTD for VAT it will not be possible to file any VAT returns through the government gateway online VAT return.

Allow at least 24 hours after submitting the last non-MTD VAT return before signing up (more if payment is made by direct debit – see below). HMRC will send the agent immediate acknowledgement and will follow this up with an email (usually within 24 hours, but it can take up to 72 hours) confirming that the agent can now use their MTD software to file on behalf of that client. Do not attempt to file the first MTD for VAT return until the confirmatory email has been received.

Those that pay by direct debit have a more restricted time period in which they can sign up, due to the impact of banking regulations. Where payment is made by direct debit the business should not be signed up in the five working days after the submission deadline for the last non-MTD VAT return and must be signed up at least seven working days before the first MTD VAT return is filed. Do not sign up until the direct debit payment for the last non-MTD period has cleared.

Where clients pay by direct debit the agent is asked to provide the client’s email address (this is optional for clients that pay using other methods). This is to allow HMRC to comply with direct debit banking regulations. Using the agent’s email address is not an appropriate solution. Providing an email address means that the client is signed up to paperless VAT communications. 

4. Authorise the firm's MTD software

Before a VAT return can be filed from MTD software, the software must be authorised to communicate with HMRC systems. This process is initiated from the software product and will look slightly different in each product. The process involves:

  • Entering the new government gateway user credentials that were allocated when the ASA was set up (not the credentials that were previously used for filing VAT returns)
  • 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. It is important that all users of software within the firm are kept aware of who is responsible for reauthorising software, including any deputy if that individual is unavailable.

Authorising software can be done as soon as the ASA has been set up and an MTD compatible software product has been acquired.

HMRC support for agents

If an agent encounters a problem with these processes HMRC recommends using the ‘Get help with this page link’ on the page where the problem arises.

This allows the agent to raise a ticket with the relevant HMRC helpdesk which will respond with specific assistance. The alternative is to phone the VAT helpline on 0300 200 3700 or the VAT online services helpdesk on 0300 200 3701.    

For help with step 4 – authorising MTD software – it is best to contact the software provider in the first instances.

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:

More support on MTD VAT

Further support on MTD VAT rules and choosing software.

MTD VAT requirementsMTD software
ICAEW Know-How from the Tax Faculty

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