Troubleshooting MTD (Making Tax Digital) issues in QuickBooks Online

Why this happens: If you’re unable to submit a VAT return, MTD might not be enabled in QuickBooks Online.

How to resolve: 

1. Go to Taxes in the left-hand menu.
2. Select Set up MTD, and follow the on-screen instructions:
   • Enter your MTD credentials (provided by HMRC)
   • Authorise QuickBooks to interact with HMRC
3. Once authorised, you’ll see an MTD enabled badge on your VAT dashboard

💡Tip: Use only the MTD-specific credentials provided by HMRC. General Government Gateway credentials won’t work.

Why this happens: Submissions will fail if your accounting period in QuickBooks doesn’t match HMRC’s records.

How to resolve: 

Step 1: Adjust start date for first return

• Go to Taxes, and select the VAT tab
• If filing your first return, set the start date as the day before the tax period begins (e.g., 31st May for a 1st June start)

Step 2: Turn off and reconnect MTD

1. Go to Taxes, and select Edit VAT Settings.
2. Turn off MTD, file the period before the current one, and reconnect to MTD

Why this happens: The HMRC confirmation email is required to set up MTD. Without it, you can’t complete the connection in QuickBooks.

• The email may have been flagged as spam or junk
• HMRC could still be processing your registration

How to resolve:

1. Check your Spam/Junk folder: Look for emails from HMRC
2. Wait 72 hours: HMRC may take up to three days to process registrations

Contact HMRC: If you still haven’t received the email, contact HMRC to confirm your registration and request credentials

Why this happens: Your connection to HMRC expires every 18 months and must be reauthorised to meet HMRC security requirements.

How to reauthorise:

1. Go to Taxes, and select Edit VAT Settings
2. Turn off MTD

Reconnect QuickBooks to HMRC using your MTD credentials

Why this happens: If you have overdue filings, your VAT return will be rejected.

How to resolve: 

1. Log in to your HMRC account
2. Check for overdue returns
3. Clear all obligations before submitting your VAT return through QuickBooks

Why this happens: Sometimes, a period in QuickBooks or HMRC may be marked as "filed" even though no return is required.

How to resolve: 

• Contact the QuickBooks support team for help updating your filing status
• Alternatively, contact HMRC directly to confirm your filing requirements

Why this happens: Sometimes, issues are caused by outages in QuickBooks or HMRC systems.

How to resolve: 

• Visit the QuickBooks Status Page or HMRC’s Service Tracker to see real-time updates on system outages
• Subscribe to notifications for incident updates

Why this happens: This error indicates that QuickBooks is no longer authorised to connect to HMRC or your credentials are incorrect. This could be because: 

• Your connection to HMRC has expired (18 months)
• You’re using incorrect credentials
• HMRC has not authorised your agent services account
• The VAT registration number in the VAT Centre doesn’t match HMRC’s records. Please check the details in QuickBooks Online to ensure they’re correct, whether you’re authorising for your business or a client. 

How to resolve: 

Step 1: Reauthorise QuickBooks Online

• Go to Taxes, then select Edit VAT settings
• Select Turn off MTD
• Reconnect using your MTD credentials

Step 2: Verify credentials

• Make sure the credentials you use are specifically for MTD, not general Government Gateway credentials

💡Tip for Accountants and Bookkeepers: Use an Agent Services Account registered with HMRC. General agent credentials won’t work.

Why this happens: This happens when filing too early or without permissions.

How to resolve: 

1. Wait until the end of the tax period before filing your return
2. Confirm permissions are active in QuickBooks and HMRC

Accountants and bookkeepers must use an Agent Services Account (ASA) to manage MTD submissions on behalf of clients. Regular HMRC agent credentials will not work for MTD.

How to set up an Agent Services Account

1. Visit HMRC’s Agent Services Account Page for step-by-step guidance.
2. Ensure you link all relevant clients to your ASA to enable MTD submissions on their behalf.

Troubleshooting ASA-specific issues

CLIENT_OR_AGENT_NOTAUTHORISED error: This may occur if your ASA is not properly linked to your client’s VAT account or if HMRC has not granted authorisation.

• Check your ASA and confirm the client’s VAT account is correctly linked.
• Ensure you’ve completed the authorisation process for each client in HMRC’s system.