So, you’ve got your head around HMRC’s Making Tax Digital (MTD) requirements and have a compliant software solution in place, but how, and when do you inform HMRC that you are MTD-ready?
Digital Account? Business Tax Account? Government Gateway? Let’s make sense of it all…
The MTD sign-up process
The process to sign up for MTD with HMRC can be completed by either a business or by their VAT agent (advisor or accountant such as Menzies). Be sure to agree with your VAT agent who will be responsible for this process.
All businesses falling within the MTD regulations – businesses/Partnerships/Sole Traders/Landlords whose vatable turnover exceeds £85,000 – are required to create a Business Tax Account (BTA) which will allow you to view your VAT Returns and receive notifications from HMRC.
Your BTA is different to your existing Government Gateway account.
Before you or your VAT agent begin the MTD sign-up process you’ll need to have the following at hand in order to create your new digital business tax account:
- Your Government Gateway user ID and password
- Your VAT registration number.
Why is timing important when signing up for MTD?
It is important to consider the timing of the creation of your BTA as once you have opted into the making tax digital service, you cannot then opt out again – it is no longer possible to file any VAT returns through the old government gateway. It is therefore important that you have MTD compatible software, or an MTD bridging software solution in place before you undertake the sign-up process.
You should allow at least 24 hours after submitting your last non-MTD VAT return before creating your BTA. You will need to have created your BTA and be registered for MTD at least a week before your first MTD VAT Return is due.
Direct Debit users
For those that pay by direct debit, timing is even more crucial. Where payment is made by direct debit the business cannot be signed up in the 5 working days after the submission deadline for the last non-MTD VAT return and must be signed up at least 7 working days before the first MTD for VAT return is filed.