Signing clients up for Making Tax Digital

As an accountant or bookkeeper, your clients may approach you to help get them set up for Making Tax Digital (MTD). This quick guide contains everything you need to know about how to sign up clients for MTD.

What is Making Tax Digital?

Making Tax Digital is a government initiative to simplify the UK tax system. Since April 2022, all VAT registered businesses have been required to follow MTD for VAT rules, unless exempt. This means they must keep digital records and submit their VAT returns via MTD compatible software.

When should clients be signed up for Making Tax Digital?

All VAT-registered businesses should already be signed up to MTD and be submitting VAT returns to HMRC using MTD compatible software, unless exempt. If you're registered for VAT, you'll automatically be signed up for MTD for VAT.By April 2026, self-employed people and landlords with turnover above £50,000 must start using MTD-compatible software to comply with MTD for IT. Sole traders and landlords earning above £30,000 will follow in 2027. And, sole traders and landlords earning above £20,000 will need to follow MTD for IT rules from April 2028. Launch dates for MTD for IT for general partnerships are yet to be confirmed. MTD for corporation tax is also yet to be mandated. Take a look here for more information on Making Tax Digital timelines.

Can an agent sign up a client for MTD?

Yes, but this is no longer necessary for Making Tax Digital for VAT. Since August 2022, HMRC has automatically signed up VAT registered businesses to MTD. This means you don’t need to sign up clients for MTD for VAT anymore, you just need to make sure they’re registered for VAT.

You can only sign up clients for MTD for IT through your software provider. You’ll need to sign your client up via compatible software, and you can only do this if they’re already registered for self assessment. HMRC has a guide to signing up for MTD for IT.

How to register a client to Making Tax Digital

For VAT, you no longer need to register clients for MTD – they'll be signed up automatically, by HMRC. So as long as your clients are registered for VAT, they'll be signed up for MTD. To sign clients up for MTD for IT, you'll need: - An agent services account (ASA) - MTD for IT compatible software - Your client's full name, date of birth, and National insurance number - Your client's business name, address, and the nature of their business - Their business start date and accounting method

How to sign up a client to Making Tax Digital for VAT

Before, accountants and bookkeepers could sign up their clients for MTD for VAT with an agent services account, MTD compatible software, and some basic information from the client.

Now, VAT-registered businesses are automatically signed up for MTD. You no longer need to sign your clients up for MTD, just make sure they’re registered for VAT.

How to sign up a client to Making Tax Digital for Income Tax?

To register a client for MTD for IT, you need to sign into your agent services account, follow the steps, and ask your client to authorise you. Your client may already have authorised you for Self Assessment in your HMRC online services for agents account, in which case, you need to copy this authorisation over. For new clients, you'll need to request authorisation so that you can handle MTD for IT on their behalf. And it's crucial that your clients have MTD software in place, so that they can keep digital records and submit returns. From here, you can sign into your government gateway account and sign authorised clients up for MTD for IT.

How to create an agent services account

In order to deal with your clients’ tax affairs on their behalf, you’ll need an agent services account. You can create an agent services account on the gov.uk website.

To create an agent service account you must be:

• the person responsible for your firm’s tax and administrative matters
• registered as an agent with HMRC
• a registered member, if you’re creating an account for a Limited Liability Partnership

How to add clients to your agent services account

Copy across existing VAT clients from your HMRC online services account.

If you want to act for a client that you have not copied across as detailed above, they’ll need to be signed up to Making Tax Digital. You can then ask them to authorise you but you cannot do this step for them.

In your agent services account, select ‘ask a client to authorise you’. This creates an authorisation link for you to send to your client. Just make sure they use it before it expires.

Will clients already signed up for MTD for VAT also need to sign up for MTD for IT?

Yes. Clients that meet the criteria will need to sign up for MTD for IT. They can do this themselves, or you can do this on their behalf.

Once your clients are signed up for MTD

• Ensure your clients are aware of how MTD will affect their tax management going forward. This guide to MTD for small business owners is a good resource to start with.
• Once they’re signed up, they must comply with MTD and follow the rules. They must begin digital record keeping and using digital links, even if you file VAT returns for them
• They should be aware of the MTD penalties that they could face if they don’t comply with digital record keeping.

Signing clients up for MTD FAQs

How do I get client authorisation for MTD?

You need to use HMRC's online services for agents account to be able to deal with clients' tax on their behalf. Simply:

• Sign into your online services for agents account
• Click 'authorise client' in the left hand menu
• Select 'request an authorisation'
• Pick the tax service you're requesting authorisation for, and pop your client's details in

Your client will receive an authorisation code in the post in a week, that you'll need to use within 30 days. From here, repeat the first two steps above, and instead of selecting 'request an authorisation', click 'enter authorisation code'. Then, select your client and add the code. Going forward, you'll only need to do this for MTD for IT clients – not VAT. Clients are automatically signed up for MTD when they register for VAT.

Do sole traders have to register for Making Tax Digital

Sole traders and landlords earning above £50,000 need to follow Making Tax Digital for Income Tax from April 2026. Those earning above £30,000 need to follow MTD for IT rules from April 2027. And, those earning above £20,000 need to follow MTD for IT rules from April 2028. So, your sole trader clients will need to be registered for Making Tax Digital ahead of the deadline, depending on their income.

How to register for MTD as an agent?

You'll need an agent services account to handle clients' tax. To set one up, you need:

• Your government gateway account details
• The UTR number for your practice and associated postcode
• Your company registration number and VAT registration number (if you have them)
• Your national insurance number and date of birth

Your anti-money laundering supervisory body, membership number, and renewal date Head to the HMRC website to create your agent services account.

How MTD compatible software can help you and your clients

The right accounting software for Making Tax Digital will not only help ensure your clients are fulfilling their legal obligations, but it will also allow you and your clients to enjoy the benefits of automation and digitalisation. Xero’s MTD for VAT solution is one of the UK’s most popular ways to submit a MTD VAT return and comes with a roster of additional features to help your clients build a healthy business.