A bookkeeper’s role in digitalising tax affairs

Now that Making Tax Digital (MTD) for VAT is in effect, it’s easier to reflect on HMRC’s digitalisation initiative with clarity.

Where before certain parts of the legislation initially appeared unclear, today we’re able to identify the exact responsibilities of both clients and bookkeepers. Whether that’s knowing how to move your accounts online or selecting bridging software to ensure compliance, all parties now have the resources to stay on the right side of the taxman come tax return deadlines.

However, in spite of this, we’re still seeing several common mistakes from bookkeepers in regard to their role in MTD. To help clarify, Mike Parkes from GoSimpleTax outlines the bookkeeper’s role in preparing clients for the digital age.

Register yourself first

Before you can start filing MTD for VAT returns on behalf of your clients, be conscious of the fact that bookkeepers need to register themselves first. A large number of bookkeepers still believe they are somehow exempt from registering for MTD.

Simply put, if you’re going to be submitting MTD VAT returns on behalf of clients, then your first priority should be to set up an agent services account. This account will enable you to access HMRC’s MTD services and migrate your existing clients from your current HMRC agents account (assuming there is a valid 64-8 in place), so you can file the new MTD VAT return on their behalf.

Register your client

Your clients may not be confident in registering for MTD for VAT, so they may need a helping hand or at least a steer in the right direction.

They will need to register with HMRC. To do this, they will need their Government Gateway ID and password, VAT number and business email, plus the last VAT return they submitted. In addition to this, a sole trader would need their National Insurance number, and partnerships or limited companies will need their UTR.

Bear in mind that the window for registering a client for MTD is at least seven days after their last non-MTD return submission.

In addition, HMRC advise that your clients register at least seven days prior to the submission deadline (if they pay VAT by direct debit) or at least 72 hours for others. It actually takes 72 hours for HMRC to set up the MTD account and confirm by email when done. Leaving this process to the last minute may result in a client missing the submission date.

Authorise your MTD for VAT compatible software

Once you have set up your agent services account, migrated your clients, and ensured that they have registered for MTD, you are then ready to choose and connect your MTD-compatible software. If you or your clients are using an up-to-date bookkeeping package, then it’s likely that this will be MTD compatible. You can see a full list of MTD-compatible software on the GOV.UK website.

However, if you have clients that use spreadsheets or legacy, non-compliant software, then you will need to use ‘bridging software’. This software should allow your clients to maintain their current bookkeeping process while complying with the new regime.

Simplify record-keeping

MTD for VAT doesn’t solely involve the digital submission of VAT returns. All eligible clients will be expected to maintain digital bookkeeping records, either by using software or a spreadsheet – a process that can be daunting to the unfamiliar. We are still hearing of cases where bookkeepers are allowing clients to maintain paper bookkeeping records. Even in cases where clients don’t yet need to register for MTD for VAT, this will likely change in the future.

Remember, whatever method clients choose, you’ll need to review their records before submission. Incorporating the support of MTD for VAT software that caters to clients of all shapes and sizes can help in that regard.

You may also find the following videos from GoSimpleTax of use which contain a guide for preparing for MTD for VAT:

https://youtu.be/9AAeD1lOY80

https://youtu.be/0ZW2BUj7REs

About GoSimpleVAT

With GoSimple, digitalising tax affairs becomes easy. Their bridging software, GoSimpleVAT, accommodates spreadsheets and PDF versions of the VAT 100 calculation to support businesses that use spreadsheets or legacy bookkeeping software.

Bookkeepers should act as guides throughout the MTD process. By using software such as GoSimpleVAT, you’ll be able to ensure each client is compliant.

IAB professional members can receive a discount on GoSimpleVat.  To find out how to gain the discount please login to the Members’ Area of our website and visit the Member Benefits section.

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