Making Tax Digital for Agents

Introduction

If you use an accountant or bookkeeper to manage your tax affairs, they need proper authorisation before they can sign you up for Making Tax Digital for Income Tax or file returns on your behalf. Agents must set up an agent services account with HMRC, obtain your permission, and use compatible software to manage your Making Tax Digital obligations. This article explains how the authorisation process works and what different types of agents can do for you.

Understanding agent types: main agents and supporting agents

Making Tax Digital for Income Tax allows you to appoint two types of agents:

Main agents have full access to manage your Making Tax Digital for Income Tax affairs. They can view all your income sources, submit quarterly updates, finalise your overall tax position, and submit your final tax return. Most accountants act as main agents.

Supporting agents have limited access. They can only see your business and property income details, submit quarterly updates, and add or cease sole trader and property businesses. However, they cannot finalise your tax position, submit your final return, or view your full Self Assessment picture. Bookkeepers often work as supporting agents.

You can only have one main agent at a time, but you can appoint any number of supporting agents. You can also have supporting agents without a main agent, or a main agent without supporting agents. This flexibility allows different professionals to handle different parts of your tax affairs.

How agents get authorised

Before an agent can act on your behalf for Making Tax Digital for Income Tax, they must first create an agent services account with HMRC if they don't already have one.

The agent then uses their agent services account to request authorisation from you. When they make this request, they must specify whether they want to be a main agent or supporting agent. You'll receive different consent statements depending on which type they've requested, so you'll know exactly what information they can access and what tasks they can perform.

If you do not agree to authorise an agent, HMRC will continue dealing with any agent you've already authorised.

Automatic authorisation for existing clients

In some situations, HMRC automatically authorises agents as main agents:

• If an agent has already signed you up for Making Tax Digital for Income Tax through their agent services account, HMRC treats them as your main agent
• If an agent adds existing Self Assessment authorisations to their agent services account before you sign up for Making Tax Digital for Income Tax, HMRC authorises them as your main agent

Even with automatic authorisation, you or your agent still need to complete the sign-up process for Making Tax Digital for Income Tax separately.

Adding existing Self Assessment authorisations

If you already work with an agent for Self Assessment, they need to transfer these authorisations to their agent services account before they can help with Making Tax Digital for Income Tax.

The agent signs into their agent services account and selects 'Add existing Self Assessment authorisations to your agent services account'. They'll need the Self Assessment agent code linked to your authorisation.

This process adds all client authorisations linked to that Self Assessment agent code to their agent services account. If an agent has multiple Self Assessment agent codes, they can repeat this process for each one.

Important points about adding authorisations:

• It does not remove the agent's access to their HMRC online services account – they can still use this for traditional Self Assessment work
• It does not automatically sign you up for Making Tax Digital for Income Tax – this is a separate step
• It authorises the agent as a main agent for Making Tax Digital for Income Tax
• Once added, the two accounts are linked – any new clients or updates to Self Assessment authorisations in the HMRC online services account will automatically update permissions in the agent services account

What main agents and supporting agents can do

Main agents can:

• Sign you up to Making Tax Digital for Income Tax or opt you out
• Contact HMRC about your current and previous tax returns
• View all sources of your Self Assessment income
• Add or cease your sole trader and property businesses
• View and amend your non-business income
• Request repayments on your behalf
• Adjust your payments on account
• View due dates for payments, quarterly updates and tax returns
• Choose compatible software and use it to manage both your business records and tax return
• Submit quarterly updates of income and expenses
• Finalise your overall tax position and submit your final tax return (including uploading supporting documents)
• Submit tax return amendments
• Claim losses and reliefs such as capital allowances

Supporting agents can:

• Sign you up to Making Tax Digital for Income Tax or opt you out
• Contact HMRC about your sole trader and property businesses
• Add or cease your sole trader and property businesses
• View due dates for payments, quarterly updates and tax returns
• Choose compatible software and use it to manage your business records (but not your full tax return)
• Submit quarterly updates of sole trader and property income and expenses
• Claim losses and relief such as capital allowances (if they relate to business income)

Neither main agents nor supporting agents can set up Direct Debits on your behalf or change how you want HMRC to contact you.

Using software on behalf of clients

Agents must use Making Tax Digital compatible software to manage your quarterly updates and submissions. Before signing up, agents should confirm with you that you approve the software they've chosen.

Some Self Assessment software includes features that allow agents to retrieve your information from HMRC automatically, including PAYE details, taxable social security benefits, National Insurance details, and Marriage Allowance information. This helps complete your tax return more efficiently.

To use these features, agents need:

• Your authorisation to act on your behalf
• Compatible Self Assessment software with this feature
• An HMRC online services for agents account (note: this is different from the agent services account used for Making Tax Digital)

When agents first use this feature, the software will ask them to grant authority to access your data from HMRC. This authority lasts for 18 months, and agents can check or withdraw permissions at any time.

Changing or removing agent authorisations

If you want to change your main agent, it's your responsibility to tell your current main agent. When you authorise a different main agent, your previous main agent will lose access to your account.

Supporting agents remain authorised when you appoint additional supporting agents or change your main agent.

To remove an agent's authorisation, you can do this through the 'Manage Your Tax Agent' or 'Manage who can deal with HMRC' option in your personal tax account.

Agents can also cancel their authorisation themselves by signing into their agent services account, selecting 'Cancel a client's authorisation', and following the instructions.

If an agent stops working on behalf of any Making Tax Digital for Income Tax clients, they need to sign in to both their HMRC online services account and agent services account to delete the authorisations from both places.

Sources

• Add your client authorisations for Making Tax Digital for Income Tax
• Choose agents for Making Tax Digital for Income Tax
• Use software to help complete your client's Self Assessment tax return

This article provides general guidance based on current HMRC rules. For advice specific to your situation, speak to your accountant.