The roll-out of Making Tax Digital is already underway and the first major phase of the initiative, Making Tax Digital for VAT, began 1 April 2019.
For businesses that submit monthly VAT returns, the first deadline for filing returns under Making Tax Digital is 7 June 2019. Eligible businesses may have received an email from HMRC outlining this key date.
The deadline for affected businesses paying VAT via direct debit was 31 May 2019. If your clients were unable to sign up by this date they must submit the ‘old’ way. There are currently no penalties where businesses are doing their best to comply.
However, for the majority of businesses that file quarterly, the deadline is 7 August 2019.
Under Making Tax Digital for VAT, most VAT registered businesses with a turnover above the £85k threshold have to keep digital records and file their VAT returns using compatible software, such as Xero.
Follow these easy steps to ensure you and your clients are fully prepared:
Identify affected clients
As we approach the 7 June deadline, it’s important to identify within your customer base which clients you’ll need to migrate to digital accounting – so you can prepare them for this key date.
Making Tax Digital presents a significant opportunity to migrate desktop software users to cloud accounting software. Moving accounts online may be met by some resistance by some clients, but it’s easy to defeat any concerns when you’re armed with the right information.
Remember that for your clients already on Xero, the Making Tax Digital for VAT software is available on any Xero plan that supports VAT – at no extra cost and with no updates to install.
If you’re moving clients to Xero, easily convert up to two years of clients data to Xero from select Sage and Quickbooks desktop and online products for free with Movemybooks.
We can also help you convert full or partial transactional balances from other accounting software that your clients may be using, including FreeAgent and Kashflow. Find out how on our Client Migration Resource Centre.
For those struggling to convert clients to Making Tax Digital software in time, then Xero’s bridging software can help. It’s available in all Xero plans that support VAT – except for those on the Flat Rate Scheme.
Sign up to Making Tax Digital for VAT
As an agent submitting Making Tax Digital VAT returns on behalf of your clients, you’ll need to sign up for an Agent Services Account – this is a process managed by HMRC.
You only need one Agent Services Account for your organisation, and you can use this for all new digital services, including ones developed in the future.
Once you create a new account, you can link existing agent-client relationships to it. For more information read HMRC’s guidance here.
When you’re ready to sign clients up to MTD, visit the HMRC signup page. You’ll need to know:
- Your practice’s Government Gateway ID and password for MTD services – these are the credentials you generated when you created your Agent Services Account.
- Each client’s VAT registration number.
- Additional information about the client’s business.
- The client’s email address.
Alternatively, clients can sign themselves up to MTD.
It can take up to 72 hours for HMRC to sign the business up, so leave plenty of time to complete this step.
Remember, the deadline for affected businesses paying VAT via direct debit was 31 May 2019. If your clients were unable to sign up by this date they must submit the ‘old’ way. There are currently no penalties where businesses are doing their best to comply.
Why choose Xero for Making Tax Digital?
Xero has been working with HMRC for over three years to ensure you’re supported through this transition to digital tax.
After conducting several pilots and gathering feedback from accountants, bookkeepers and businesses, we’ve built software that ensures you can fulfil your Making Tax Digital obligations.
New features ensure easy compliance – saving you and your clients precious time when it comes to VAT.
You and your clients can benefit from:
- Knowing which VAT returns are due
- Posting VAT returns in real time
- Viewing and adjusting VAT returns
- Viewing history and notes
- Drilling down to transaction details
Xero Making Tax Digital resources
To help you with the process of communicating with your clients, we’ve developed a Practice Marketing and Communications Toolkit.
Run your own Making Tax Digital event and show your clients what they mean to you. We’ll equip you with all the material you need.
For updates, guidance and resources to help you and your clients, visit our Making Tax Digital Resource Centre.
HMRC Making Tax Digital resources
If you experience any problems signing into your Agent Services Account, follow the HMRC guidance here.
Discover Making Tax Digital information and ask general questions on the HMRC Agent Forum.
All of the relevant Making Tax Digital for VAT content – including support videos – can be accessed here.