We tackle three questions accountants may have around MTD for VAT

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Over the past few years, accountants and bookkeepers have become de facto gurus for UK small businesses, offering vital support through one unforeseen catastrophe (a global pandemic), to the next (supply chain issues, Brexit fallout, any number of others).

Their consistent excellence in shepherding small businesses through these challenges has not gone unnoticed. Xero research found that almost half (45%) of small businesses believe their advisor is more important to them than ever.

And this reliance is unlikely to fade, even if some pressing issues – lockdowns and other restrictions – appear to be on the way out.

Now, UK small businesses face an additional set of government-mandated regulations that will see them once again turn to their advisors for support. This time, it’s the next wave of Making Tax Digital (MTD), with business owners who charge VAT with a taxable turnover under £85k having to comply from April 2022.

Hundreds of thousands of affected businesses will have to maintain financial records digitally and file VAT returns through approved software. A welcome push to digital transformation, many advisors will be well prepared in getting their clients MTD-compliant and helping the more tech-phobic among them overcome their reticence.

However, you may still have questions around this upcoming phase of MTD for VAT. Here, we tackle three of the most pressing.

How do I set up my accounting practice for MTD for VAT?

First things first – you’ll need to get your practice ready for MTD for VAT. The process is made up of multiple steps that can be tackled pretty quickly, and here’s a quick overview of what you’ll need to do:

Create an agent services account to access HMRC’s MTD features.
Copy existing clients across from your online services account.
Sign your existing clients up for MTD.
Ask new clients to authorise your practice from their VAT account.
Authorise your MTD-compatible software.

For more information, check out this helpful guide.

How do I add clients to my agent services account?

You’re going to want to allow plenty of time for clients to get set up for MTD for VAT, so it’s vital to copy across existing VAT clients from your HMRC online services account as soon as possible.

If you’re acting on the behalf of a client that you have not copied across, they’ll need to sign up to MTD – which is relatively straightforward, but may also place an additional administrative burden on them.

If they’re happy to do this, you can ask them to authorise you but unfortunately you cannot do this step for them. Our useful guide offers more information on how you can authorise your clients for MTD.

How do I sign my client up for MTD for VAT?

The million pound question – this is how you get your small business clients ready for this brave new digital dawn. Just visit the gov.uk website, and enter a few basic business details (a full list can be found here).

You’ll also need:

An agent services account
MTD compatible software

Expect a confirmation email from HMRC within 72 hours, and if you don’t receive one, contact HMRC to confirm sign up. After this, you and your clients should be ready for compliance, and for you to usher them into an exciting digital future.

Meanwhile, if you need any more information on MTD for VAT, Xero has a host of useful resources available for accountants, tackling any questions you may have.

The post We tackle three questions accountants may have around MTD for VAT appeared first on Xero Blog.