Get set up for Making Tax Digital (MTD)

HMRC now automatically sign up all VAT-registered businesses to MTD. To submit VAT returns to HMRC in Sage Accounting, all you have to do is:

1. Make sure you have entered your VAT registration number and selected the correct VAT scheme in the settings.
2. Tell HMRC that you authorise Sage Accounting to submit your VAT returns.

1. Make sure your VAT scheme and VAT registration number are correct.
2. From Settings, then Business Settings, select Accounting Dates & VAT.
3. Check your:
   • VAT Scheme
   • VAT registration number - this is nine numbers
4. Make sure your VAT returns are up to date and shown as submitted. Delete any draft VAT returns.

Authorise your software with HMRC

Finally you just need to tell HMRC that you authorise Sage Accounting to submit your VAT returns.  You'll also need to re-authorise every 18 months.

Authenticate with HMRC

You will need your Government Gateway credentials to sign in to the Gateway as part of this process.

1. From Settings, then Business Settings, select Accounting Dates & VAT.
2. From the Making Tax Digital section, select Authenticate.
3. Select I am signed up with HMRC for Making Tax Digital then select Authenticate. This takes you to the Gov.uk website.
4. Select Continue when prompted, and sign in with your Government Gateway credentials.
   If you’re a VAT agent, enter your agent services account ID and password.
5. When prompted, select Grant authority. You are returned to Sage Accounting. When you see a confirmation message at the bottom of the page, that's it, you're done.

Fix MTD errors

While trying to authenticate with HMRC or submit a VAT return, the following message may appear: We were unable to authenticate with HMRC.

This can occur when:

• The company VAT registration number in Sage Accounting is not linked to the Government Gateway user ID you authenticated with
  To check the VAT registration number, go to Settings, then Business Settings and Accounting Dates & VAT
• The Government Gateway credentials were not correct, when you authenticated
  To check this, go the Government Gateway and make sure you can sign in using the same ID and password

If you have checked all of the information above and are still receiving the error, please contact HMRC (opens in new tab).

Businesses exempt from MTD

A small number of businesses are exempt from the MTD rules.

These are businesses where HMRC is satisfied that you meet one of the following criteria (outlined in HMRC VAT Notice 700/22: Making Tax Digital for VAT).

• Your business is run entirely by practising members of a religious society whose beliefs are incompatible with the requirements of the regulations (for example, those religious beliefs prevent them from using computers)
• It is not reasonably practicable for you to use digital tools to keep your business records or submit your returns. This may be for reasons of age, disability, remoteness of location or any other reason
• You’re subject to an insolvency procedure

HMRC will decide if you meet the exemption criteria. To avoid potential penalties you must check with them directly and don’t just assume you meet the criteria.

Create your VAT Return and submit it to HMRC

Recording VAT payments and refunds

Resubmit a rejected VAT return with Making Tax Digital (MTD)

Reauthorising with HMRC for Making Tax Digital (MTD)