Signing up to Making Tax Digital for VAT - step by step for agents
Agents who will be providing MTD for VAT services to clients need to follow the preliminary steps of understanding the MTD for VAT requirements, agreeing responsibilities with clients and choosing MTD for VAT software. Once these steps have taken there are specific processes to be completed to implement MTD for VAT. This guide explains the steps involved.
The page was last updated on 19 March 2019.
The four steps are:
The link to set up an agent services account (ASA) and the associated HMRC guidance is available on gov.uk: Get 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 an ASA to use the Trust Registration service and will already have the ASA credentials they need for MTD for VAT.
Other agent services continue to be accessed through the existing agent portal using current credentials, as before.
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.
Each client needs to be individually signed up to MTD for VAT. This will remain the case when MTD for VAT goes live in April 2019; HMRC will not automatically transfer businesses to MTD for VAT.
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 for Making Tax Digital for 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). In the future, functionality to sign clients up to MTD for VAT may be available in software.
The timing of this step is critical – it is the point of no return. A business should not be signed up to MTD for VAT until all its non-MTD for 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 or using non-MTD compatible XML VAT software.
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 be signed up, due to the impact of banking regulations. Where payment is made by direct debit the business cannot be signed up in the 5 working days after the submission deadline for the last non-MTD VAT return and must be signed up at least 7 working days before the first MTD for VAT return is filed.
This can be illustrated as follows:
Monthly filers that pay by direct debit:
|First MTD for VAT return
||Sign up period starts
||Sign up period ends|
|March 2019 (pilot)
||15 April 2019
||25 April 2019
||15 May 2019
||30 May 2019
Quarterly filers that pay by direct debit:
|First MTD for VAT return||Sign up period starts||Sign up period end
|Jan/Feb/Mar 2019 (pilot)
||25 April 2019
|Feb/Mar/Apr 2019 (pilot)
||30 May 2019
|Mar/Apr/May 2019 (pilot)
||15 April 2019
||27 June 2019
||15 May 2019
||30 July 2019|
||17 June 2019
||29 August 2019
||15 July 2019
||27 September 2019
The extent to which clients need to be involved in the agent initiated sign up process for MTD for VAT has changed during the pilot. Clients no longer need to have a government gateway ID and access to their business tax account in order to complete the sign up to MTD for VAT process. From 1 April 2019, providing the client’s email address is a requirement only for clients that pay by direct debit – it is optional for clients that pay using other methods.
Providing the client's email address when signing a client up to MTD for VAT means that the agent is agreeing (on behalf of the client) that future VAT communications will be paperless. HMRC will email the client to ask them to confirm the email address but the client will be signed up to MTD for VAT and for paperless communication whether or not they confirm the email address. Clients will need access to their business tax account to receive these communications so, where possible, it is strongly recommended that clients do have a government gateway ID and access to their business tax account.
If a client does not have an email address the best option is to help them to set up access to email. Where this is not possible the options are:
- claim exemption from MTD on digital exclusion grounds
- change to a payment method other than direct debit
Using the agent’s email address is not an appropriate solution.
Before a VAT return can be filed the MTD software product must be authorised to communicate with HMRC systems. The process is initiated from the software product and will look slightly different in each product. The process involves:
- Checking that the product has been upgraded by the software supplier to be MTD for VAT compatible
- 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.
How to help with these processes
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 agent dedicated line on 0300 200 3311 and ask to speak to the MTD team.