It’s been talked about in the background for a few years now, but the first deadlines for being ready and signed up for MTD (Making Tax Digital) are approaching.
The first compulsory MTD submissions are anticipated to be for VAT quarters starting on 1 April 2019. So unless you’ve got a shortened quarter for some reason, quarters ending 30 June 2019 and onwards. Prior to that date, you can typically voluntarily opt in to the pilot (beta test). This post should help you with the sign up process.
Overview of what needs doing
I will assume for this purpose that you already use MTD ready software (eg FreeAgent) for your bookkeeping. If you don’t, you’ve got a much bigger upheaval, as you may well need to change how you do your bookkeeping. Discuss with your accountant if you’re unsure.
On the basis you are using MTD ready software, the hassle is modest, and change other than short term tweaks is trivial. For the time being at least, only the numbers in the VAT boxes are submitted, and only when you click the button to submit. However behind the scenes it’s being transmitted in a different way. Prior to MTD, data is submitted as/when instigated by you, with you needing to add your HMRC Gateway ID details each time, as they’ll go with the submission to show it’s from you. Post MTD, you’ll be setting up a permanent link between your bookkeeping software and HMRC portal. So when you come to submit data, it will be quicker and you won’t have to re-enter ID/password, as it’s not revalidating anything.
1) Make the required tweaks to your HMRC portal account. It’s critical this step is done before any changes to your bookkeeping software. Reason being the HMRC side is the tricky bit (more down to their poor UX than anything else), and all sides need to be aligned. Ie if you tweak your FreeAgent account to opt for MTD, then struggle with the HMRC side, you’ve got a problem. Given how unfriendly the HMRC side can be, we’ve got a step by step “what to click where” guide further down.
2) There’s a button that either user or accountant can change on FreeAgent to switch the account over to MTD. I believe this is hard/impossible to reverse…so do step (1) first!
3) This will add a new settings menu to FreeAgent, where you need to link FreeAgent up with your portal. Ie tell FreeAgent your HMRC gateway ID and password.
4) You’re done! Next time you go to submit a VAT return, it will look slightly different, but you’ll barely notice.
HMRC portal step by step
If there is a painful bit, it’s this. We’ve run through it recently and taken screen prints of every step. Unfortunately HMRC are constantly tweaking things, so inevitably it won’t be long until the process deviates slightly from what’s below, but hopefully you can follow it easily enough!
Login to your HMRC portal account, which must already be enrolled for online VAT services. If you’re unsure what I mean by this, you’ve got some more basic bits to deal with first, discuss with your accountant.
From here I’ve used red text for my comments to help them stand out from text in the many screen prints.
1) Url as things stand looks to be: https://www.access.tax.service.gov.uk/login/signin/cred
2) Enter your gateway ID and password, deal with any 2 factor authentication security issues, scroll down slightly, and you should see a page like the below (personal details blurred out, and key bit for this purpose highlighted in red by me):
3) Then you want to sign up for MTD for VAT:
4) You’re then signing up your own business:
5) For next question, again we’re assuming you already use FreeAgent/equivalent:
6) …and yes, FreeAgent is ready for MTD:
7) We’ll assume for this purpose you have just the one relevant business:
8) …and it’s a Ltd Co:
9) Enter your Cos Hse registration number (if you’re unsure, either ask your accountant or search for your company name from https://beta.companieshouse.gov.uk/):
10) …and confirm it’s the right one:
11) Happy with emails?
12) What’s your email address:
13) Check email address for typos:
14) Verify email address:
15) NB this next one is from an email received, not following the webpage:
16) Email verified:
17) You sure you know what you’re letting yourself in for(!):
18) Next page should be confirmation you’ve done all you need to…for now.
As it suggests, patience from here. Hopefully within a few working days you’ll get a further email from HMRC confirming acceptance onto the pilot. Once you’ve got that, move on to the FreeAgent bit which is a doddle/lightning quick in comparison (other software packages will likely have something similar).
****A FEW DAYS DELAY****
19) Hopefully you’ll get an email like the below:
That’s the painful bit done!
FreeAgent settings to tweak
On FreeAgent, go to “Settings” (from top right):
Then under the “Integrations” subheading you should see a new option “HMRC Connections”:
You should see a page like the below:
Click the big green button, which then takes you to an HMRC page again:
Click “Continue” and you’ll need to provide your 12 digit HMRC gateway ID and password one more time:
Then click “Grant authority”
Following that, you’re done. You should revert back to FreeAgent and see:
From now on, you’ll barely notice the difference. You’ll still submit VAT returns from FreeAgent, only difference of note for you as a user is that you won’t need to put in your HMRC gateway ID and password each time, as there’s a permanent link already set up.