This is for Accountants.

The new Making Tax Digital system is utterly different from anything you have ever previously seen, and has multiple entry points in order to achieve normal functionality. If you pick the wrong entry point you will just be confused, so work from an Intranet which might look like this. You can use Microsoft Word to set up an HTML file which you can make available to everybody in your firm, and they can all have a link to it on their desktop. You can copy and paste from this page, and then re-edit the result to your own requirements. The Revenue has got us beta-testing their system with real money, so we will give as much detail as we can.

To log in to the old HMRC Online Services for Agents:

https://www.gov.uk/log-in-register-hmrc-online-services

Only use the old User ID. Do not use the new Agent Services Account User ID which would just be useless.

To create an Agent Services Account:

https://www.gov.uk/guidance/get-an-hmrc-agent-services-account

with the current or old User ID. You have probably done this already. We already had a mobile phone for the practice for SMS messaging and we used that for the two-step verification that is required. Use of an employee’s mobile phone is inadvisable.

To log in to the new Agent Services Account:

https://www.gov.uk/guidance/sign-in-to-your-agent-services-account

Only use the new ASA User ID!  Don’t use the old User ID which would mean trying to set up another ASA!
Run the routine Link your current Self Assessment and VAT clients to this account if you haven’t done it already.

The Agent Services Account does not do much. Functionality is divided between several entry points and your VAT software in a peculiar way. Maybe it’s a security feature, in fact so secure that nobody will be able to pay their taxes. Two-step verification will be required every eighteen months.

To sign up a client for MTD:

First print off and file the VAT Registration Certificate from the old system.

https://www.gov.uk/guidance/sign-up-for-making-tax-digital-for-vat

Click on Sign up your client’s business  and use the new Agent Services Account User ID to log in.
Have the client VAT number and Company Registration Number ready. The CRN is in 8-character format.

The first thing you will see after signing up a client for MTD is that the client disappears from the old system, and it might be a good idea to check this that evening, and print off, initial and date what you see. Average processing time is about 26 hours. The first thing you might see in the morning is the client becoming visible in your software. You should then receive a confirmatory e-mail by about lunchtime. Print-off, initial and date everything.

To change a client’s details in the new MTD system:

https://www.gov.uk/guidance/update-your-clients-business-details-if-theyre-part-of-the-making-tax-digital-for-vat-pilot

with the new Agent Services Account User ID. Have a look with any new signings to check they are visible and print off, initial and date.

You may also be able to view submitted VAT Returns and VAT Certificates using this entry point. These are new features. This is entry point Alpha.

To amend or check the client reference, log in to the new Agent Services Account:

https://www.gov.uk/guidance/sign-in-to-your-agent-services-account

Only use the new ASA User ID!  Don’t use the old User ID which would mean trying to set up another ASA!
Click on Manage User Access to your Agent Services Account and then on Clients. Update the client reference as required and print off, initial and date the evidence. This is entry point Beta.

VAT returns are submitted from your software. Two-step verification should never be required for individual submissions. VAT returns are also viewed only from your software. We recommend setting up someone else’s software on a second computer to be able to check that VAT returns have been uploaded correctly. HMRC do not provide a free read-only viewer which has been commented upon in the HMRC Agent Forum. Once a VAT return is submitted, it should be downloadable at once. Any VAT liability will be reflected in the downloaded display after another half hour or so, and we have printouts showing the system being caught in the act. Basically it looks as if there is a working engine under the bonnet, but a weird coach-building job. As usual, print off, initial and date all the evidence, especially at first.

Direct debits are collected about the sixth of the month after a timely submission of the VAT return, but may not be visible in the accountant’s software until the eleventh of the month. This page will have DRAFT status until we are more sure of this.

Payments made by a client other than by direct debit appear to take two or three days to be visible in the accountant’s software and the payment date is reported. The outstanding liability is changed to reflect payments made.

We may need to warn you of the possibility that your MTD software can upload a VAT return and print a receipt, but cannot download a view of payments made by your client and the outstanding liability if your client makes a series of payments. Things you can do about it are to complain to your software vendor, use someone else’s software on another computer, and check with your client in the case of direct debits. This is definitely not a reliable system. We are currently using other free software to do the checks on payments, and then checking on HMRC’s system for the You owe HMRC: £0 message once the return is paid off. See entry point Alpha above. 

To check service availability:

https://www.gov.uk/government/publications/making-tax-digital-for-vat-service-availability-and-issues/making-tax-digital-for-vat-service-availability-and-issues

Have a look at VAT returns on both computers when the service is unavailable to get an idea of how your software works. You will want to know that any return you are looking at is from the Revenue website and that your software is not just telling you what you want to hear.

Why all the upheaval?

Notice that processing of a submitted 9-box VAT return is instantaneous. The new system can process much larger quantities of information quickly and without getting clogged up. From next year the Revenue will be asking for uploading of the backing schedules which go with the VAT return, and who knows after that. The sinister scenario is that they will be using data-mining techniques to decide whom to investigate. More likely it is that Big Brother will merely get an attack of indigestion and realise that it is best to leave it to accountants to summarise the data, as we have been doing for centuries.

In setting up a new tax collection system, HMRC always have a choice:

The Way of Pitt (the inventor of income tax)

Try to be helpful. Go the extra mile with people. They do make mistakes, so be forgiving. Pay attention to graceful degradation, which means that when things go wrong, they should not go catastrophically wrong. Offer more than one way to do something and have plenty of backup systems. Communications should have reference numbers so that at least an accountant can sort it out. Build in some overlap with previous systems. Provide extra tools for use during transition periods. Give people time to adapt. When people do something which is below par, giving them a warning but allow it anyway. Try to have standardised ways of doing things.

The Way of Napoleon (Pitt’s enemy)

Being helpful is more than my job’s worth. All deviations from the rules need to be punished. When things go wrong, kick the punter back out on the street. Communications should omit any useful detail, especially anything sent to Grouchy. For security reasons, we cannot provide that information and anyway, it’s someone else’s responsibility. Make plenty of abrupt changes across the board to leave everybody struggling. Make random changes with no obvious merit or demerit to spoil people’s habits. Move things around without telling anybody. Waste massive resources on futile projects like invading Russia. Make sure every tax has its own peculiar system.

Our optical character recognition software for scanning bank statements needs to be very much Way of Pitt and most definitely not Way of Napoleon. We are very keen on making tax digital, but we do not see our tax collection authority as a serious player in the game.

DRAFT