By Annie Makoff Making Tax Digital Will online-only VAT registrations really clear HMRC’s backlog? 17 Nov 2023 There are benefits to going digital, but it’s not clear how this will help reduce the backlog. VAT registrations are now online-only by default in a move to improve efficiency, security and of course, attempt to clear HMRC’s backlog. HMRC has removed the downloadable form from its .GOV website, so those unable to register online will now need to phone HMRC’s VAT helpline to request the VAT1 paper form. Over 95% of HMRC customers now use the service, which is ‘quicker, easier and more secure,’ according to HMRC’s 112 agent update. Yet the online-only default will not be as straightforward for everyone. Although the majority of UK businesses can register online, there is a significant proportion of those unable to, either because they have little or no access to the internet (‘digitally excluded’) or because they do not have a Unique Taxpayer Reference (UTR). HMRC themselves admitted there may be ‘specific types of registrations’ that would need to be done via a VAT1 form. These include: A limited liability partnership (LLP) registering as a representative of a VAT group. Registering individual business units of a corporate body under separate VAT numbers. Registering an overseas partnership. A local authority, parish or district council. Applying for a registration exception. HMRC now requires customers to justify why they are applying for a VAT1 form and are required to phone the helpline to speak to an advisor before a form is sent out – a step likely to result in long hold times and then a further wait for the form itself to be posted. Given the majority of agents already use the online system for VAT registrations and are still experiencing delays in receiving VAT numbers, it’s unlikely that the latest change will improve backlog. So what do accountants think, will pushing more people to register online for VAT make a difference? Online-only VAT registration is welcome – it provides a more efficient, streamlined approach and will potentially clear the backlog quicker Karen Feltham MAAT, Owner, Aligned Accounting HMRC being online-only could allow for better tracking of registrations as paper forms easily get lost in the post, creating unnecessary delays and increased waiting times. It does offer a more streamlined and convenient approach in terms of compliance as well. So in theory, the backlog should be cleared quicker as the data can be easily passed to a team of people and equally tracked for progress. I’ve had a very positive experience so far with the online system. Tracking the forms has been considerably easier and being able to instantly register clients in real-time rather than posting a form and hoping it’ll arrive has invariably led to increased waiting time and frustration from the client. Chasing registrations has been difficult to track if the form hasn’t been logged as ‘received’. There will still be a need for the paper method for some businesses, but I feel that online registration should be encouraged where possible, especially as VAT is MTD now anyway. It modernises the UK VAT system and allows for greater efficiency across the board – potentially! Verdict: The move to online-only VAT registrations is welcome – it provides a more efficient, streamlined approach and will potentially clear the backlog quicker. Additional support and resources are needed Clare Bowen, Partner, Monahans HMRC is facing huge backlogs and experiencing unprecedented levels of delays in many areas, particularly where enquiries are made by post. I had an awful situation where a female client ended up getting her Maternity Allowance after she’d returned to work due to serious HMRC delays. The online-only VAT system is therefore most welcome as it will remove most human intervention and speed up processes by pushing through simple applications automatically. It will free up people to assist with the backlog and to deal with the more complex registrations. It will be interesting to see how the online-only system copes with these types of registrations. For example, when a sole trader converts to a limited company and wants to switch over the VAT number which previously required a paper form. We’ve used the online VAT registration system for some time now as paper forms had a habit of getting lost or separated from supporting documents. Even so, the ability to check on an application made on paper or online has become much more difficult due to the lack of HMRC phone lines. The online-default system needs a method to review progress of an application. HMRC needs to put skilled resources into areas that are severely lacking or their backlog will get worse and will continue to provide a substandard service. Verdict: The online system will help but additional support and resources are needed to tackle the backlog. Delays continue to cause issues for clients regardless of online-only Claire Bartlett, Director, Arden Bookkeeping It makes sense for VAT registration to be online-only now, but I don’t think it will make a difference to the backlog as most people do it online anyway. However, those who need to use a paper form now have to phone up to request it. That’s not ideal for those who are time-strapped, and it will only add to HMRC’s backlog. What’s hugely frustrating however, are the big delays with VAT registrations. I registered a client in January this year and we’ve only just received a VAT number in October! It’s been very stressful – she’s had to put money aside and has had a year of VAT transactions with no VAT number. HMRC has also removed telephone support so you can’t even phone with any queries. It’s very difficult to chase progress and forms still get lost even if they’ve been done online. A way forward would be to improve the online chat function. It has its benefits – you can get on with other things while you’re waiting instead of being placed on hold on phonelines – but it’s very limited on how much support and help it provides. Verdict: VAT registration should be online-only but there are still delays, causing huge issues for clients. Online-only won’t clear the backlog Chris Money MAAT ATT CA Business Services Manager, McLay, McAlister & McGibbon Although the online system itself works fairly well, we’ve had a few registrations delayed by a number of months, including one where we registered in April and still haven’t received anything from HMRC. One of the longer delays was due to the client being involved in a commercial property transaction which added a layer of complexity. More simple registrations are (generally) processed without too much delay. However, I don’t believe the online system will solve the VAT registration backlog. Most agents are already using the online registration system, so the only time-saving effect would be from clients registering themselves directly. Even then, it would only save time if there are systems in place to automate processing and I don’t hold much confidence that this is the case. We’re essentially viewing the online-only default as a change that doesn’t affect us operationally. As for those who can’t register online, the process where you need to contact HMRC for forms can become a little convoluted. Especially as there are already unnecessary delays before you even factor in the call/wait time. The lack of communication and the feeling that you’ve just been kicked down the road when awaiting a delayed response is frustrating. A facility to answer some questions online to filter those who are online only and then download/complete the form before printing to post would be so much better. Verdict: The online-only default won’t clear the backlog. It’s just a change that is unlikely to affect accountants operationally. Would you like to contribute to future articles like this one? If so, please get in touch with Annie Makoff-Clark at firstname.lastname@example.org. Upcoming topics include: the autumn statement, AML difficulties and how accountants are using AI in their practice. Annie Makoff is a freelance journalist and editor.