MTD for VAT has now been live since 1 April 2019, so what has the experience been like for taxpayers? "Mixed" seems to be the best answer.
When HMRC's MTD sign-up process and linking of MTD compliant software (eg VAT Controller) to their systems works, VAT returns are being submitted without issue. However, HMRC are experiencing a number of problems despite the system being in pilot for over a year. Issues our clients have experienced include:
HMRC have built in a 72 hour delay in the MTD sign up process which is most bizarre - this delay between a taxpayer signing up to MTD and receiving HMRC's confirmation email is causing confusion and irritation. When the confirmation email is finally received HMRC do not include any details of the VRN or business name. This is fine if you only have one VAT registration, but many of our clients have multiple VAT registrations which is causing tracking and control problems - but it also adds an element of surprise to the process!
The sign up issues most commonly occurring are receiving a NO_DATA or CLIENT_OR_AGENT_NOT_AUTHORISED error message when using the APIs. Our advice is to check whether the sign-up has been successful by logging into the Business Tax Account (BTA) and noting whether it refers to MTD for VAT. If not, try the sign-up process again - if the HMRC website lets you do it, then the first attempt wasn't successful. If it doesn't, then wait at least 72 hours and if things still aren't working, contact HMRC.
June 2019 returns will be the 1st quarterly submissions under MTD, and there will inevitably be heavy demand on HMRC's systems when these registrations start enrolling for MTD in late June / July. Our advice is to:
Direct Debits also seem to be subject to random issues - there is anecdotal evidence that some HMRC DDs are not being collected even when showing as set up on the BTA and with the bank or even being collected early ie days after the return was submitted, not on the correct due date. These may be exceptions, but to avoid any issues we suggest taking control and cancel the DD after the last non-MTD payment has been taken, paying the 1st MTD VAT liability by bank transfer, and then setting up a new DD instruction. For those taxpayers who are in the deferred group and mandated from 1 October 2019, now is the time to start thinking about how your processes will become MTD compliant.
Despite what some MTD software providers will tell you, Excel is still very much a valid part of MTD compliant processes. HMRC have specifically confirmed that Excel and bridging software will continue to be MTD compliant once the 12 month light-touch for digital links is over. You do not need to throw away existing workbooks that you know work and have relied on for years - you just need to know which elements of the process to automate. That's where Tax Automation come in - our flexible approach seamlessly combines any existing Excel based processes by using our Excel VATPacks in conjunction with VAT Controller's powerful database and workflow to give a fully MTD compliant end to end process.
If you would like to know more about how VAT Controller can support your move to MTD, please contact Bryony Clinton on 0118 935 7140 or email bryony.clinton@taxautomation.co.uk