How to register a client for MTD for VAT

This article provides advice to accountants on how to register clients for MTD. If you are a small business owner looking to register your own business, read our article on How to Register for Making Tax Digital for VAT instead.

Making Tax Digital addresses the tax gap caused by businesses failing to submit their tax returns correctly and pay the right amount of tax. While the tax gap fell to a record low in 2020, errors on tax returns and businesses’ failure to take reasonable care still cost the Exchequer £8.5 billion in lost revenue.

Small businesses account for the biggest percentage of the tax gap at 43% or £13.4 billion of the total liabilities. While all VAT-registered companies over the VAT threshold of £85,000 must comply with MTD for VAT, research shows that less than 50% of businesses have registered. As such, accountants play an important role in making sure clients comply and avoid penalties.

Keep reading to discover how to register a client for MTD, including:

• Getting set up on MTD-compliant software
• Registering with HMRC as an agent
• Create an agent services account
• Gather the necessary information & register your client
• How to manage your clients’ VAT after registering

Accountants wanting to register their clients for MTD must go through a different process than business owners looking to self-register their company. While the process can be slightly more complicated, it does set you up to manage your clients’ VAT returns going forward. 

Before you can register your client for MTD, you’ll need to set up MTD-compliant software to submit their VAT returns. Good accounting software should be easy to implement and use and come with features like:

• Connecting directly to client’s business current account
• Providing real-time transaction data to avoid you having to chase for bank feeds
• Profit and loss, balance sheet and trial balance reports
• Payment reconciliation via matching payments to invoices

You might also want to consider pricing, reputation/track record, and any other features for facilitating better collaboration with your client.

Before you can register a client for MTD, you’ll need to set up a client services account and register with HMRC as an agent. Only accountants can register for a service account, and you must already have secured anti-money laundering registration.

Once you’ve registered, you’ll then need to collect the following information from your firm to create an agent services account:

• Government Gateway ID and password
• Unique Taxpayer Reference (UTR) & associated postcode
• Company registration number
• VAT registration number
• National Insurance number and date of birth (for sole traders, business partnerships and limited liability partnerships)
• Money laundering supervisory body name, membership number and renewal date

You’ll also need to gather information about your client, such as:

• VAT certificate
• Business entity type
• Contact details & business email address
• National Insurance number (for sole traders)
• Company registration number and Unique Taxpayer Reference (limited companies and registered societies)
• Company registration number, Unique Taxpayer Reference and postcode where they’re registered for their self-assessment (limited partnerships)
• Unique Taxpayer Reference and postcode where they’re registered for their self-assessment (general partnerships)

Once you’ve set up your accounts, registered and gathered the necessary information, you can then register your client for MTD online.

You’ll then receive a confirmation email from noreply@tax.service.gov.uk within three days. Remember to check your spam folder if you don’t receive it, as the email could easily end up there, and you mustn’t submit a VAT return until after you receive the confirmation email.

If you’ve registered a new client for MTD, you’ll first need to authorise them on your agent services account before you submit their VAT returns.

After you’ve registered your client for MTD, it’s essential to help your client stay up-to-date with the VAT returns and ensure they remain compliant. Here are some things you might want to think about after you’ve registered your client.

1. Updating their details. Make sure your clients’ business details stay up to date.
2. Show your client their VAT online account. Since clients can still use their VAT online account to view upcoming VAT deadlines, manage payments, print their VAT certificates, and view completed returns, you may want to give them a tour, so they know where to find this information.
3. Submit VAT returns. You can now use your MTD-compliant accounting software to submit VAT returns directly to HMRC.
4. Set-up direct debits. Help your clients set up a direct debit to pay their VAT bill, so they don’t miss payments or face financial penalties.

Save your practice time on manual admin and help your clients keep organised records with Countingup’s free accounting software, built specifically to help you manage your self-employed and sole trader clients. Our software is MTD-compatible and full of features for accountants to review and manage client accounts efficiently, prepare journals and client taxes accurately with direct access to their real-time organised data. Find out more here.