MTD for VAT in five easy steps

RESOURCES | ACCOUNTANTS & BOOKKEEPERS

Read our five easy steps and help your clients become compliant with Making Tax Digital (MTD) for VAT.

1. Get your firm up to speed

It’s important to get your internal team, and in particular your fee earners, up to speed on the implications of MTD for VAT. And everyone needs to be kept up to date with the latest news. Some useful resources include HMRC and ICAEW, but don’t forget to look out for updates on the Xero MTD resource centre.

As you gear up your team, think about setting up an MTD task force. This group can identify who’s responsible for onboarding, training and providing ongoing support to clients. Depending on the size of your firm, consider formal project management administration and have a sponsor or decision maker, plus a project manager.

As part of your preparation for MTD, join us on our MTD learning journey. We offer a suite of educational courses that help you upskill and prepare for future compliance. Once you’ve completed the learning journey, you’ll be recognised as an MTD-ready firm in Xero’s advisor directory. Find out how to become an MTD-ready firm here.

2. Plan your segmentation

Making Tax Digital is a great motivator for going digital. An important part of your segmentation plan is to understand within your customer base, which clients you’ll need to migrate to digital accounting and when. It is mandatory for most businesses with a taxable turnover above the £85k VAT threshold but optional for those below the threshold.

There’s 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 MTD for VAT solution is available on any Xero plan that supports VAT.

For more on segmenting your clients, complete our Migration Certification course which forms part of Xero’s MTD learning journey.

Moving clients to MTD compatible software? Easily convert up to two years of client data to Xero from select Sage and Quickbooks desktop and online products with our free data conversion tool, Movemybooks.

3. Plan for communication

Communication to clients is absolutely key. To help you with the process of communicating to your clients, we’ve developed a Practice Marketing and Communications Toolkit.  

This toolkit will provide guidance about how to communicate the change with your clients, so you can make sure they’re MTD-ready with minimal fuss.

You’ll find some guidance and resources to help you with your marketing and communications strategy, including:

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Why Xero for Making Tax Digital?

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Getting your team up to speed

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Communicating MTD and Xero to clients

4. External training

Your clients will appreciate training around Making Tax Digital for VAT. For many small businesses there is little awareness of MTD so include this key content in your training agenda:

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Inform clients about the timing of MTD and changes to their responsibilities.

 

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Make sure clients are ready to keep digital records or, as their accountant, you can do it for them.

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Make sure they have access to their Business Tax Account (BTA) even if they have an accountant working on their behalf, as there are some things they may need to do through their BTA for MTD.

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For spreadsheet users and desktop users, make them aware of the benefits of cloud accounting software. If you’d like to hold an MTD event, check out our event resources here.

Contact your account manager for more information on client training.

5. Sign up to the Agent Services Account

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 will 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 agent Government Gateway user ID used by your practice for your VAT clients.

• 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.

Xero helps practices to thrive

Digital software can help practices to grow, and there’s no better example than Xero – online accounting software that makes your processes more efficient and profitable.

Submit online VAT returns

Xero makes it easy to submit VAT returns online – with simple, accurate tracking.

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Xero HQ gives you the tools you need to get your processes humming, all in one place.

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Solutions for clients of all sizes

Move your smallest clients off spreadsheets and onto Xero with Ledger and Cashbook.

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Our recent research showed that Xero partners grow four times faster than the UK industry average – and your practice can benefit too. The first step to building a better practice is to join the Xero partner programme.

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