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Tax & Accounting18 June, 2019

Common questions around Making Tax Digital for VAT answered

Since the introduction of Making Tax Digital (MTD) for VAT and the first submissions, we’ve been engaging with many of you, our customers, to better understand the issues surrounding this change. We have also received lots of questions as many come to grips with how they will be impacted.

Here is a list of some frequently asked questions and their answers which might help you for your next monthly submission or your first quarterly submission in August.

How long does it take for HMRC to approve client sign-ups once you have completed the HMRC sign up process for MTD for VAT?

The signup process takes about 72 hours for HMRC to approve the client on to MTDfVAT. Until this time is passed there is no obligation from HMRC to return to MTD for that client. If you configure the VAT number after this 72-hour period and receive a confirmation email from HMRC, you will be able to successfully configure the client for MTDfVAT.

Can my client submit their own VAT Return using CCH OneClick?

The CCH OneClick client workspace enables your clients to submit VAT Returns. Give your client a platform to continue with many of their current VAT processes that may involve the use of a spreadsheet.

Are there any penalties for not complying with MTD? Will HMRC understand practices who are trying their best to comply?

HMRC recognises that businesses will require time to become familiar with the new requirements of MTD. HMRC has been clear that during the first year, they will not pursue record-keeping penalties where businesses are doing their best to comply with the law. But this does not mean a blanket ‘no penalties promise’.

The VAT Default Surcharge (DS) regime will continue to apply to safeguard VAT revenue, and other sanctions remain possible for deliberate non-compliance. MTD should not increase the risk of this penalty, as this penalty is only levied where a business doesn’t pay their VAT or pays late while in DS.

Customers who receive a DS can contact HMRC if they have a reasonable excuse for this and HMRC will take account of all the relevant circumstances into consideration.

What’s an API-enabled spreadsheet and do I need one?

An API-enabled spreadsheet is when a spreadsheet has the capability to send data directly to HMRC’s API’s without using any bridging software. If using CCH OneClick, your spreadsheets won’t need to be API-enabled, our solution will be able to work with any spreadsheets you are currently using today.

What if my client’s income drops back below £85k? Can I go back to manual filing?

Once a client has transitioned to MTD, they cannot go back to manual filing once they drop under the threshold, if, they continue to be VAT registered.

Will our clients be automatically enrolled in MTD for VAT or do we need to do something?

You will need to go through an exercise of identifying:

  1. Which clients you undertake VAT work for
  2. Which of those have turnover over the VAT threshold.

You will then have to register each of these clients (or the clients can do this themselves) on HMRC’s website for MTD for VAT. It’s like the approach for Self-Assessment and VAT returns where the onus is on the taxpayer to inform HMRC that they meet the requirements to undertake this type of reporting.

My practice has more than one Agent Services Account. Can I work with them all from one location?

CCH OneClick now allows practices with multiple Agent Services Accounts to work with all of them within a single CCH OneClick environment.

Do zero-rated businesses have to use the new system?

Yes, MTD applies to all VAT registered businesses over the VAT threshold. Zero-rated goods are still VAT-taxable.

If you are an existing CCH OneClick customer and have any questions that need answering, click here to access the Customer Community, where you can also log a case with our support team.

We’re experts in providing information, software and services to tax executives who work in complex, compliance-driven environments.  Our innovative and mobile technology provides the information that tax, accounting and audit professionals need to make accurate decisions, comply with legislation and to increase the efficiency of their operations. We support our customers by offering expertise from our in-house team of finance professionals, ex-accountants and developers.
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