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MTD for ITSA: The role of the agent

How familiar are you with the agent's role under MTD for ITSA? Here’s a quick rundown of what you need to know.

• There are two types of agents within MTD for ITSA: the main agent and the supporting agent. Supporting agents are, of course, a departure from the current system; they will typically deal with digital record-keeping and/or quarterly updates for one or more of the client’s MTD-relevant businesses.
• The basic rule is that taxpayers can have only one main agent at any given time. However, they can have as many supporting agents as they wish. Within these parameters, there’s a wide degree of flexibility: they don’t need to have a main agent to have a supporting agent, or vice versa.
• Main agents can sign their clients up to MTD for ITSA (and indeed, can opt them out if they’re no longer required to use the system), and they can carry out most of the tasks needed to run their client’s annual MTD for ITSA compliance cycle. For example, they can see all of their client’s income sources and their tax calculation, submit quarterly updates and the MTD tax return, access payment records and reduce payments on account, etc. Agents (whether main or supporting) can’t set up a direct debit, and they can’t change how their client wishes to be contacted by HMRC: clients need to do those things for themselves.
• If the digital records and quarterly updates are dealt with by a supporting agent, the main agent can view those quarterly updates, but can’t view or amend the underlying digital records. This poses a difficulty if the main agent spots an error in the business results during the year-end finalisation/MTD tax return process. Often, errors will have been spotted during the tax year, and rectified in a subsequent quarterly update – but where this hasn’t happened, there are two options for making the necessary correction. First, the digital record can be amended and the final quarterly update resubmitted; or alternatively, the error can be fixed in the MTD software, and the underlying digital record can be amended to match. Either of these will need the main agent to liaise with the supporting agent who deals with the business concerned.
• Supporting agents have a lower level of functionality: they too can sign clients up for MTD for ITSA (and opt them out again), and they can add or cease an MTD-relevant income source. However, they can only view their client’s MTD-relevant income sources – so they can’t see, for example, employment or pension income. They can’t prepare or view the tax calculation or MTD tax return, and they can’t reduce payments on account, for example, or request a repayment.
• Taxpayers with multiple MTD for ITSA-relevant businesses may opt to appoint a different supporting agent to deal with each of these. They may, for example, have different supporting agents to deal with their sole trade and their rental business. In this situation, clients should be aware that HMRC cannot limit the access of these supporting agents to the business that they deal with. The agent who deals with the rental business will be able to see the records for the sole trade, and vice versa.
• HMRC refer to the MTD for ITSA authorisation process as the ‘digital handshake’. For new clients, you’ll request authorisation as MTD agent via your agent services account, specifying whether you are to be the main, or a supporting, agent. HMRC will contact your prospective client, explaining the tasks you’ll be able to carry out for them, to obtain their agreement.
• You’ll automatically be authorised as main agent for your existing self-assessment clients. However, you may need to copy the authorisation across from your online services account to your agent services account ( last week’s article explained how to do this).
• Authorisation must be in place before you can sign your clients up to MTD for ITSA. Of course, you need to explain the new system to your client, and obtain their permission.
• Ending your authorisation can be done online – but HMRC say that this must be done in both the agent services account and the online service account. Your client may of course end your authorisation themselves. Note that if they appoint a new main agent, your authorisation will automatically end.