Set up your practice for Making Tax Digital (MTD) for VAT

This article explains how to set up your practice for MTD for VAT.

Please note that since 8th April 2021, you have been required to use FreeAgent's MTD connection in order to file your clients’ VAT returns to HMRC.

1. Create an agent services account with HMRC

First, you will need to create an agent services account with HMRC for your practice. This will generate a new Government Gateway ID which will give your practice access to HMRC’s MTD services. A practice will only ever have one set of credentials for MTD and you will need to keep hold of any existing Government Gateway IDs you use to access HMRC’s other online services.

If you’ve signed up for the Trust Registration Service (TRS), you may already have an agent services account in place with HMRC. If this is the case, you don’t need to create a new account. Instead, log in and follow the steps outlined below.

2. Add your practice’s Government Gateway details to your HMRC agent services account

Next, log in to your agent services account and add all of your practice’s existing Government Gateway credentials that are used for VAT filing on behalf of clients. This will link the authority that your practice currently has for VAT filing to its agent services account.

If you have multiple sets of credentials, you will need to add them all to your agent services account in order to link the authority for all your existing clients.

3. Request authority to file VAT returns on behalf of any new clients

You will also need to request authority to file MTD VAT returns on behalf of any new clients directly from your agent services account. Please note that these clients must have a Business Tax Account (BTA) to be able to authorise a new agent relationship.

4. Connect your HMRC agent services account to FreeAgent

Once you’ve successfully created your agent services account and any new clients have authorised your new agent relationship, you will need to use the new Government Gateway ID credentials to connect FreeAgent to HMRC.

To do this, log in to your Practice Dashboard, select ‘Settings’ from the drop-down menu in the top-right and then choose ‘HMRC Connections’.

Select 'Connect Agent Services Account' and follow the on-screen instructions to complete the process.

What happens next?

Your HMRC agent services account will be connected to FreeAgent and your practice will be set up for MTD. Next, you will need to set up your clients for MTD in FreeAgent.

Reconnecting FreeAgent to HMRC

HMRC requires you to reconnect FreeAgent to HMRC every 18 months.