Making Tax Digital for VATFinally the month for submission of VAT returns via MTD arrived and we survived. Months and months of talking about it, reading about it and watching webinars. Then we just had to get on with it. 

If you are a VAT registered business you will know by now that MTD (Making Tax Digital) has arrived.  There has been information everywhere for the last 12 months about signing up if you are over the VAT threshold of £85,000, ensuring you don't sign up too soon if you pay by direct debit (or too late!) and about using software to keep your accounts records that has been approved by HMRC so your VAT returns can be submitted through it.

MTD means no longer logging on to HMRC website to fill in the 9 boxes of your VAT return which businesses have done for many years since paper returns were no longer accepted.  It means no longer submitting VAT returns through your software as you may have done for the past few years since that option became available.

No, HMRCs decision that everyone over the VAT threshold must submit their returns through accounts software meant a whole new process for everyone.  Those already submitting returns through their software now have to submit in a different way and those not using compatible software had to find some they could use or source a bridging option.  HMRC produced numerous webinars explaining how to sign up and how agents should sign up their clients after first creating a whole new agent account with HMRC which, interestingly, would never show which clients were signed up to MTD.  Just as well I kept a spreadsheet!

I decided that we wouldn't join the pilot scheme and whilst July would be our busiest month for VAT returns I thought it better to tackle this task in one go.  Despite having 64-8s for VAT for all our clients this didn't automatically register us as online agent, so the first step in the MTD process was becoming registered through our agent account.  This is the time when you find out that the client hasn't updated their address since they moved 5 years ago and therefore the authorisation code is sent but never received!  Time is spent then trying to update the address when no-one has any of the shared secrets because someone many years ago set them up and didn't pass them on.  Once change of address achieved and authorisation code successfully received (sometimes it took 2 attempts before they received it) I was ready to sign them up to MTD.  

Of course, once all the clients were registered with us as agent I then had to set up a completely new agent account.  One which wouldn't show me who was in it!  Not sure I understand the logic of that.  That was a challenge because I thought I had done it, but couldn't see if I had and then was advised by HMRC I had to follow a completely different HMRC website link to my new account. 

So finally I was ready to sign everyone up to MTD.  Monday 1st July was the day!  I spent several hours that day registering around 35 Quarter 1 and Quarter 2 businesses for MTD.  And then I waited for the confirmations from HMRC.  When I opened my email on Wednesday 3rd July I was relieved to see 2 confirmation emails.  It worked!  But then nothing. Nothing for the rest of the day.  Nothing on Thursday.  Finally on Friday the emails started coming in, one after the other.  But of course nothing so simple as an email telling me which client had been successfully registered - just an email with a VAT number in it.  

Fortunately the spreadsheet I had prepared at the beginning of this process to track information and progress was vital for identifying which businesses had been confirmed as registered for MTD by HMRC.   This was the only way I would know if any MTD registration was not confirmed.  We did have a couple of clients who did their own MTD who didn't receive confirmation and on advice from HMRC had to reapply.  So it was a bit of a lottery whether it would work or not.

Anyway finally by the end of 5th July we were ready to file our Quarter 1 MTD VAT returns and I am pleased to say that over the month we have so far successfully submitted 24.  Registrations for Quarter 3 will be the next task once all the Quarter 1 returns are completed.

It certainly created a lot of work for us as agents to get ready for MTD because we do have a lot of clients and a lot of VAT returns to prepare each quarter.  However now its in place and returns have been filed I am concerned it is just to easy. The press of a button and it is gone.  No pop up to give you a chance to change your mind or to ask if you are really, really sure!  

Changes aheadIt remains to be seen how things change moving forward.  We have submitted returns through Sage and Xero this month and it highlights to me how easy it would be for anyone to submit a return without the return being finalised.  At least when a return is "flagged" or "published" a choice is made that the return is complete but in both cases this can be undone.  There is no such step now.

I will get used to it, just like I did when it changed from paper to online returns and when payroll filing changed from paper to online and then to RTI.  Change is always happening but I don't think any of those have been so much work to prepare for as MTD.

We have group VAT returns postponed until 1 October so it will be interesting to see how things will work out with those.  We will be experienced MTDers by then!