Accountants: You need an agent services account for Making Tax Digital

HMRC has recently issued updated guidance, confirming that accountants and tax advisers need to create (sign up for) a single Agent Services Account (ASA) for their entire practice.

Under Making Tax Digital for VAT (MTDfV), it will only be possible for an agent to file MTD-compliant VAT returns or to access their client MTDfV information using an ASA credentials.

Presently, an ASA is required to sign up clients to Making Tax Digital, to register a client’s estate or a trust.

Today MTDfV, tomorrow the world

Although limited in what an agent can do with an ASA at present, in the longer run it will play a key part in both HMRC’s and Government plans to become one of the most digitally advanced tax administrations in the world (HMRC’s words, not mine).

Getting your ASA

There are a number of steps that you must take along the road to getting an ASA set up.  While even HMRC admit it is a bumpy journey, thankfully it is a step-by-step process.  

There  are certain things that you will need to have to hand:

• Current Government Gateway ID’s and passwords
• National Insurance number
• Your practice’s UTR: if you are a sole trader it will be your own
• You/your firms Anti-money Laundering registration details.

Stage 1 – the ASA journey

After inserting one of your firm’s existing government gateway ID’s (it doesn’t matter which at this stage) at the “Sign in using Government Gateway” screen, you will be required to select what type your agency is, i.e. sole-trader, partnership or limited company etc. 

The response you give will determine the subsequent screens you will see as you travel along your sign-up journey.

The next selection of screens require you to enter and confirm your firm’s business details, before leading you to a screen focused on anti-money laundering (AML) compliance. This requires details of your/your firm’s AML supervisory body, the membership number and the date of expiry of the registration. 

For most AAT Licenced accountants this will be easy; AAT is your supervisory body, you insert your AAT membership number into the “membership number” box and your membership renewal date into the final box on the screen.

Successfully navigating this first part will result in you being invited to “Create a new Government Gateway user ID”.

Inserting a practice email will result in the transmission of a short code to your inbox, which will need to be inputted on the screen.  The code is purely to verify your email address.

Next, you will be requested to give your full name and then create and confirm a password.

To guard against losing a password, users are prompted to “Set up a recovery word” before finally being issued with a new Government Gateway ID.

Take care to ensure that you save the Gateway ID somewhere safe.

You are almost there………completing the next five screens gets you/your practice an Agent Services Account.

1. “Choose the type of account you need”: you should select “agent”.
2. “Enter the name of the organisation”: insert the name of your practice.
3. The final screen in this section will display your Agent ID.
4. You will be invited to “Check your details before creating your account”
5. Once confirmed, the final screen will confirm that your ASA has been created and in the middle of the screen you new account reference number will be displayed.

Make sure that you keep your Agent ID and account reference numbers in a safe place.

Stage 2 – Linking your clients listed on an old government gateway account to your new ASA

If you do not do complete the second stage, your new ASA will be empty. Simply put, it will not know about your existing clients.  While they will remain visible via your old Gateway accounts, they will be invisible to your ASA.

Start by typing in “Sign in to your Agent Services Account” in to the search box on GOV.UK. When you’re on the right page click on “sign in now” and after inserting your new ASA credentials continue through the next couple of screens until you reach a screen “Sign in using your Government Gateway”.

On reaching this screen you should insert your one of your old Gateway IDs and password, and click “sign in.” The next screen will confirm that you have successfully linked your old Gateway account with your new ASA.

This means that your newly established ASA account is aware of your clients associated with your on the old gateway account. 

The good thing is that the linkage with your old Gateway account is dynamic.  Which means, if another client is added to your government gateway account, your ASA will automatically become aware.

You will need to repeat the “Sign in using your Government Gateway” as many times as you have old gateway IDs and passwords.

One thing you need to be aware of is and which will come as a bit of a shock, is that while your ASA might know all about your old Gateway clients, you cannot view a client list from within the ASA.

Step 3: authorise MTD-compatible software

Before signing a client up to MTD, make sure you/they have MTD-compatible accounting software. 

If you/your client is already using software, make sure it is MTD-compatible and that its MTD capabilities have been enabled, but only after the client has been signed up to MTD.

Be careful: once the client has been signed up to MTDfV, all future returns must be submitted using MTD-compatible software, as the previous method will no longer work.

Step 4: Signing up your clients for MTDfV

Start by typing “Sign up for Making Tax Digital for VAT” in to the search box on GOV.UK and then, when you’re on the right page click on “sign in now”. After inserting your new ASA credentials continue to the  “What is your client’s VAT number” screen, at which point you should insert your client’s VRN and then confirm it on the next screen.

The next few screens need to input whether the business that you are registering is a sole trader, partnership or limited company etc. It will also request other details, such as name, National Insurance Number and date of birth.

The information that you  are asked to disclose will depend on whether the VAT registered entity is a sole trader, partnership, limited company etc.  Once done, you will then be required to confirm your entries. 

The next step is to supply an confirm a suitable practice email address, within 72 hours HMRC will email to confirmation that you client has successfully scribed into MTDfV.

The final collection of screens request you to input client’s email address, confirm if they wish to continue to receive hardcopy copy correspondence and finally submit the MTDfV registration.

HMRC will email confirmation (usually within 72 hours) to start using MTD software to submit the client’s return inform clients that returns are being submitted through Making Tax Digital.

Useful pointers

• With the exception of the voluntarily VAT registered, once a VAT-registered taxpayer has been registered for MTDfV it is not possible to opt out of MTDfB, even when their annualised VAT-taxable turnover falls below £85K.
• The only way for a compulsorily registered entity to leave is to deregister, but only if legally permissible.
• When registering a client you will need to ensure that you have your client’s VAT registration number (VRN), their UTR and if applicable company registration number and national insurance number.
• Once a client is signed up to Making Tax Digital for VAT, they will have to submit MTD-compliant VAT returns using compatible software or a bridging tool, and will not be able to continue using the existing system.
• Businesses that pay by direct debit should sign up for MTDfV immediately after their final pre-MTD payment has been collected.
• Deadlines for submitting VAT returns and making payments has not changed.
• Those affected have to keep digital records and submit their returns to HMRC using MTD-compatible software for all VAT periods that started on or after 1 April 2019, or 1 October for the circa 4% of deferred businesses.
• Each client needs to be signed up individually, or the client can sign themselves up.
• When connecting software to HMRC you must use your new ASA Government Gateway ID.
• HMRC will email confirmation (usually within 72 hours) to start using MTD software to submit the returns.
• Although, MTDfV came into effect from the 1 April 2019, at  present it only applies to VAT registered businesses with VAT taxable turnover above the £85,000 p.a. compulsory registration threshold.

Brian Palmer , former tax policy adviser for AAT..