How to get your clients’ accounts in order for digital VAT filing

Many accountants file VAT returns on behalf of their clients and with Making Tax Digital now live, this process has been digitised. However, filing a client’s VAT return can quickly turn into something a bit more arduous if their accounts aren’t in order.

Whether you’re new to FreeAgent or simply want a quick refresher, here’s what you need to know about filing VAT returns on behalf of your clients.

Make sure your clients’ accounts are accurate

For each VAT-registered client who you add to FreeAgent, you’ll need to enter their company start date and the date their business’s VAT registration became effective. This enables FreeAgent to use the correct dates for any pre-registration costs for the client.

You’ll also need to enter the date that your client’s first VAT return period ended. This is the date to which you prepared your client’s very first VAT return, not the date to which you prepare their first VAT return in FreeAgent (although in some cases, these dates may be the same). It’s important that the client’s VAT return period dates match those that HMRC has on record or you’ll receive an error message when you try to submit your client’s VAT return from FreeAgent.

It’s a good idea to ensure that all of the client’s bank statements, bills and expenses are up to date so that your client’s FreeAgent accounts accurately reflect the money that came in and out of their bank account during the VAT quarter. This also ensures that the calculations for their VAT return add up. FreeAgent’s powerful automation features can help you and clients keep their accounts up to date with minimal hassle. For example, our new Open Banking bank feeds automatically backfill your clients’ account with historical bank transactions, saving you and them precious time and effort.

Set up an agent services account for digital VAT submissions

If you need to sign any of your clients up for Making Tax Digital for VAT, you’ll need to do this at least 72 hours before their VAT return is due, or seven working days before if they pay by Direct Debit.

In order to file MTD VAT returns on behalf of your clients, you’ll need to create an agent services account with gov.uk if you haven’t done so already. Once you’ve created an agent services account or logged in to your existing one, add all of your practice’s existing Government Gateway credentials for VAT filing on behalf of your clients. This will copy the authority your practice currently has for VAT filing to its agent services account.

The account is also where you request authority to file on behalf of new clients. Please note that any new clients must have a business tax account (BTA) in order to authorise this new agent relationship.

Remember to sign clients up to MTD

If you’ve copied all your mandated clients over or added new clients to your agent services account already, don’t forget that you also have to sign each of them up to MTD for VAT. Go to gov.uk and enter your practice’s Government Gateway ID for MTD services to begin this process.

If you’re still struggling with getting clients’ accounts ready for digital VAT filling or have questions about MTD, contact our practice support team on practicesupport@freeagent.com.