How to prepare your clients for their first MTD submission

Contrary to the perception that August is a quiet month, many accountants use this time to future-proof their practices or speak to clients. This August will be no exception, as it marks the first Making Tax Digital (MTD) VAT submission deadline for clients who submit VAT on a quarterly basis.

If your clients are VAT registered and have VATable sales above the VAT threshold (currently £85,000), their VAT submission for the quarter dated 1st April - 30th June is the first that they will need to file through MTD-compatible software. For many clients, the deadline for their first MTD submission will fall on 7th August. With this date right round the corner, here’s everything you need to prepare your practice and your clients for that all-important first MTD VAT submission.

1. Get your practice ready

Hopefully by now you have organised your client list for MTD for VAT. If not, you can use our dashboard reporting functionality to run turnover reports across your whole client base. Our client segmentation spreadsheet for MTD can highlight which of your clients can use FreeAgent's MTD-compatible software. This will help you narrow down the list of clients you need to take a closer look at.

If you submit VAT returns on behalf of any of your clients with VATable sales above the VAT threshold, you’ll need to set up an agent services account. Add all of your practice’s existing Government Gateway credentials for VAT filing on behalf of clients. This will copy the authority your practice currently has for VAT filing to its agent services account.

For more top tips on getting your practice set up for MTD for VAT, check out our handy guide.

2. Familiarise your clients with MTD

We’ve prepared plenty of helpful resources to help you familiarise your clients with MTD. We have guides to help your clients get to grips with the lingo and some of the key things they need to know about MTD, as well as our MTD whitepaper, which provides a full overview of the initiative. We’ve also investigated the eight common myths surrounding MTD to help your clients sort fact from fiction.

HMRC has described the first year following the 1st April 2019 launch as a “soft landing period”, which is a period of time “for businesses to have in place digital links between all parts of their functional compatible software”. However, there may be some circumstances in which your clients could incur a penalty for failing to comply with the initiative during this time. Find out more in our MTD for VAT penalties guide.

In order to help you and your practice with the challenges surrounding client communication we have an MTD Express pack full of helpful tools, along with a range of MTD for VAT guides for limited companies, sole traders and partnerships that you can share with your small business clients.

3. Give it a try

We recommend that you test the process of switching clients over to MTD filing by switching at least a few of them over as soon as possible. This will iron out the process and save you the hassle of having to learn it at the last minute.

You can do this in FreeAgent by navigating to ‘My Clients’ from your Practice Dashboard and selecting a client’s name from the list. Select ‘Switch to MTD filing’. This will allow you to submit MTD VAT returns from FreeAgent on that client’s behalf. Please note that once filing for a client has been switched to MTD, it cannot be reverted - so make sure the client has been signed up to MTD before completing this step.

4. Follow the same steps for the rest of your clients

Once you’ve tried and tested the process, it’ll be a lot easier to get the rest of your clients prepared in time for the MTD deadline. If you get all of your clients ready in advance, submissions will be a breeze and you can spend most of August concentrating on future-proofing your practice, catching up with clients or simply enjoying the rest of the summer!

Looking to get clients trained up on FreeAgent? Check out our ‘Onboarding your clients’ guide!