With the mandation of MTD for VAT (MVD) less than 3 months away we look at recent developments and updates from HMRC ahead of the 1 April 2019 deadline.
Exemptions
Exemption from MVD may apply where:
- You are a practising member of a religious society or order whose beliefs are incompatible with the use of electronic communications
- An insolvency procedure has commenced in relation to your business
- It not possible for you to make a return using a compatible software return system for reasons of disability, age, remoteness of location, or any other reason
HMRC have advised that full details of how to apply for an exemption will be added to the gov.uk website by the end of January. UPDATE. You can apply for exemption using the VAT helpline on 0300 200 3700 or write to HM Revenue and Customs, VAT Written Enquiries Team, Portcullis House, 21 India Street, Glasgow, G2 4PZ
They have confirmed that the process will involve calling a helpline number and advised that wherever possible the client/taxpayer makes the call rather than their agent.
See MVD tool: who has to join?
Agent Services Account
There seems to have been much confusion amongst agents about the new Agent Services Account (ASA). In a recent agent webinar HMRC have provided some clarification on this:
- The ASA is a new online account separate from the existing online agent account which agents currently use to access to all HMRC agent services.
Note that: agents may already have an ASA: if they have registered to use the new trust online registration service.
- Once agents sign up for an ASA they can then add clients to their account but they will not be able to see a full client list (as they can in their existing accounts) for security reasons.
- Agents must apply for an ASA to act for clients online for MVD.
- Agents must use their existing government gateway ID and password to sign up for an ASA but will then be issued with a new ID and password just for the ASA.
- Once registered you will be issued with an ASA number which you need to access your account.
- The two online accounts (ASA and existing online agent agents) will run in tandem for now although ultimately the aim will be to combine them. For now it seems the ASA will function just for MVD and trust registrations.
- Adding a client to your ASA does not register them for MVD, this must be done separately (see below).
- To register for an ASA an agent must provide details of their money laundering registration. Agents without a registration must obtain one.
- HMRC have confirmed that each agent firm can have only one ASA, even if this causes practical difficulties.
Joining MVD
MVD is an opt-in system:
- Taxpayers who have joined one of the MVD pilots have already opted in to MVD
- All other taxpayers, whether mandated or voluntary must opt in to MVD.
- Simply using compatible software to submit returns is not sufficient if you have not actively opted in.
- Either the taxpayer or their agent (via the ASA) can sign the taxpayer up to MVD.
- Taxpayers should wait 6 days after their final non MVD return has been filed to sign up but this should be no later than 48 hours before their first MVD return is due, or 15 days before if paying by direct debit.
Non-compliant software and the use of bridging software with spreadsheets
HMRC have confirmed that the use of bridging software with spreadsheets is not prevented after the end of the soft-landing period in April/October 2020. As long as the correct digital links are in place a bridging system may be used indefinitely.
See Making Tax Digital: VAT (FAQs)
Deferred businesses
Some businesses have had their mandation into MVD deferred until October 2019. These include:
- VAT groups
- Trusts
- Traders based overseas
- Payments on account
- Annual accounting scheme users
HMRC advise that all such business have now been written to and if a business has not received a letter who thinks they fall into a deferred category they should contact HMRC on the VAT helpline.
The letters on deferral have been sent to the taxpayer and not their agents therefore agents may wish to check that clients have received their letters.
Agent updates
HMRC have recently started issuing bi-monthly MVD agent updates. Agents can contact HMRC at
MVD engagement letters
We understand that the main tax and accounting professional bodies have updated their standard engagement letter templates to include MVD requirements. Members should be able to access the updated versions now.
Links to useful guides:
Making Tax Digital : VAT (subscriber guide)
A guide to what Making Tax Digital really means, how it will affect you and whether your business is exempted or deferred.
Making Tax Digital: Index and timeline
Our guide to what will happen when for Making Tax Digital with all the latest updates included.
MVD tool: who has to join?
Will Making Vat Digital apply to me? Am I exempted? Am I deferred. Do I need new software to file VAT returns online? Use our tool to find out.
External links: