We have good news for those of you who missed the first Making Tax Digital sign up deadline. You will not be fined, as long as you get your VAT return to HMRC using their old online process.
How do we know this?
Tax agents got an email from HMRC’s ‘MTD for Business Customer Readiness and External Stakeholder Team’ on 1st August. It says: “If you have clients that pay by direct debit the sign-up window has closed for the 7 August. Do not worry we won’t penalise them this time, so file the old way and come back when the DD has been collected to sign up in time to file the next return. Although we will not penalise them, they will receive a letter from us telling them that they missed the deadline and asking them to take action.”
So, if you have been anxiously waiting for MTD sign-up confirmation, you can stop worrying. HMRC’s 72 hour confirmation email targets have not all been met. But now your tax professional can send your VAT Return using the existing process, and you will not get any financial penalties.
Have there been any other teething problems introducing the VAT Making Tax Digital process?
There have been a couple of other issues around the introduction of the VAT submission section of HMRC’s MTD strategy.
Problems with Agent Services Accounts
Your tax adviser may have discussed some of their other MTD issues with you. There has been widespread confusion and a lack of consistent communication regarding the Agent Services Accounts (ASA).
Part of the problem is that there was an initial assumption that ASAs would function in the same way as your existing Business Tax Account (BTA). They don’t. Your Business Tax Account is your one-stop shop for all things HMRC related. You can change you details, see any liabilities or penalties and view your PAYE, VAT and Corporation Tax situation all through one dashboard.
Your ASA has considerably less options at the moment, although it is being continuously updated.
Why is this a problem for MTD?
The problem is with the streamlining of MTD software. Basically, the taxpayer and their chosen tax professional need to be able to access the same information. One of the main objectives of the whole MTD policy, is that tax agents get all the information they need from HMRC in the most user-friendly way possible.
All individual taxpayers can see their own Business Tax Account (BTA). Tax agents can only get the same information if the MTD software allows it. And not all MTD software has this functionality.
No automatic submission confirmation
Another function that everyone had expected is a simple automatic email to confirm that your VAT return submission is received by HMRC. This was a basic element included in the old system, with tax agents able to reassure clients that their paperwork had been received by HMRC’s deadline. Now that the MTD software is specified, clients must go into their BTA to check their VAT return is with HMRC. In order to have proof that your VAT return is sent on time, you need to print out a paper copy of your return using the MTD software.
Tax agents not privy to MTD list
Several professional bodies that represent the tax and accountancy industry have asked the government to allow access to the MTD list. At the moment, there is no way for them to check to see if their clients have registered for MTD or linked to ASA.
All that is visible is the “copied to ASA” list of people whose details are copied from the old to the new ASA system. Both systems are running concurrently, but eventually they will be merged into one MTD system.
There is a separate way in to the ASA that can be used for tax agents to administer some client VAT information.
You must use the link and need the usual user ID and password details. Once in, you can sort out details like changes to the company’s business address or name. You can also alter the client’s VAT status and filing timings.
Why have there been so many obvious issues with the VAT MTD?
Many involved professional organisations repeatedly asked HMRC to extend the trial period. Unfortunately this wasn’t possible, so there was no time to iron out these glitches before going fully live. Without a proper pilot, it is inevitable that problems with processes, administration and other technical software would be unresolved. We all hope that HMRC get them resolved as soon as possible.
