tax

HMRC teething problems with MTD

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    At Crunch, we were one of the first approved software providers for HMRC’s Making Tax Digital (MTD) changes.

    The MTD changes came into force on 1st April 2019 and so far around two-thirds of our VAT registered clients have submitted a quarterly VAT return using the new MTD process. The final third of our clients are currently filing their VAT returns for the upcoming deadline of 7th October.

    As with any large-scale software launch, HMRC has experienced a number of issues which has lead to some delays and difficulties for Crunch and for some Crunch clients. We’ve been working closely with HMRC to iron out any problems, and thought it was a good time for an update on how things stand with MTD for VAT.

    How to avoid problems with filing a VAT return under MTD.

    One of the biggest problems with MTD since the changeover has been with failed VAT return filing. When a businesses VAT agent (such as Crunch) tries to file an MTD VAT return and there’s a problem with matching any of the data to HMRC’s records, the filing can fail.

    We’d recommend that clients ensure that they keep the records HMRC hold about them and their businesses up to date, in particular, the registered business address. If they don’t, this can lead to penalties, long VAT return periods which may require paper filings to be completed, and even prosecution if failed filings are ignored.

    The most common reason for VAT returns to fail when agents attempt to file to HMRC what HMRC refers to as “Missing Traders”. This is where HMRC have previously tried to contact a client at the registered business address they hold, but have not received a response.

    If HMRC’s records have marked a business as a “missing trader”, HMRC will block VAT any returns being filed until they have the correct information for the business. Previously only a client could notify HMRC of changes to the contact details. HMRC are making an upgrade to their systems to allow either an agent or a business to notify HMRC of any business address, email and contact details changes online.

    Future MTD upgrades from HMRC

    HMRC has been working to make sure all MTD clients that have active Business Tax Accounts (HMRC online login) will soon have visibility over VAT returns previously filed and be able to see the details of these returns. Although, fortunately, if you’re a Crunch client, you can already see details of all your VAT returns in your Crunch account.

    HMRC have also started to introduce more frequent “downtime” monthly so to roll out much wanted and needed improvements to the client and agents HMRC online views.

    As always, if you’re a Crunch client and you have any questions about MTD or your Crunch account, please get in touch with your client managers. If you’re not yet a Crunch client and you’d like to see how we could make managing your business finances a breeze, give us a call on 0371 705 1827 to speak to one of our friendly advisors or arrange a callback.