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Set up MTD for VAT in QuickBooks Online and connect to HMRC

SOLVED•by QuickBooks•937•Updated September 06, 2023

Making Tax Digital (MTD) is a way for businesses to keep track of their taxes and submit their VAT returns to HMRC electronically in a compliant way. This may sound like a hassle, but trust us–it's quite straightforward once you get the hang of it.

In this article, we'll cover how to:

Before you start, make sure you have set up VAT and are using the correct VAT registration number–this is essential for accurate reporting under MTD.

Authorise QuickBooks Online to interact with HMRC

  1. In QuickBooks, go to Taxes.
  2. Select Set up MTD.
  3. Select Authorise now.
  4. Select Continue.
  5. In the window that opens, sign in with your MTD Government Gateway user ID and password. This will be in the confirmation email you receive from HMRC.
  6. Select Continue.
  7. Select Give permission.
  8. Once you're connected, select Continue and then Go to Taxes.

You'll see a badge appear on your taxes dashboard to indicate that MTD for VAT is enabled. Here's what it looks like:

That's it! You're ready to submit your first MTD VAT return directly to HMRC as soon as it's due.

There is one important rule you must keep in mind when setting up the connection between QuickBooks and HMRC: You must reauthorise the connection every 18 months. This is due to HMRC's security requirements, which help ensure any data sent from your QuickBooks account to HMRC is kept safe.

Reauthorising the connection is quick and easy and only takes a few moments. Don't worry, we'll send you a reminder when it's time to do so, and all you need to do is enter your login details. Once you've done that, we'll handle everything else.

  1. Select the gear icon, and then Account and settings.
  2. Select Advanced.
  3. Next to Making Tax Digital, select the pencil icon.

Before you disconnect from Making Tax Digital in QuickBooks Online, there are few things to keep in mind.

  • Information will no longer be shared between QuickBooks Online and HMRC
  • You may no longer be able to submit digital VAT returns
  • You can reconnect to HMRC at any time by following the authorisation steps in this article

To disconnect QuickBooks from HMRC's digital services:

  1. Go to the gear icon, and select Account and Settings.
  2. In Advanced, select Making Tax Digital to expand the section.
  3. Select Learn how to disconnect.
  4. Select Continue.
  5. Select Disconnect to confirm.
  6. Select Continue to return to QuickBooks Online.

If you get an error message or can't connect, don't worry. Here's how to fix common MTD issues.

We're here to help
If you have questions about MTD, or need help getting connected or fixing an error, let us know. Sign in to QuickBooks and start a discussion with a qualified QuickBooks Online expert in our community.

QuickBooks MTD software currently supports Standard, Cash and Flat Rate schemes. QuickBooks Bridging Software supports Standard and Cash schemes. Businesses whose home currency is not GBP are currently not supported for MTD.

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