To activate the Making Tax Digital (MTD) for VAT submissions functionality in Sage

If you’ve registered with HMRC for Making Tax Digital (MTD) for VAT, before you can submit your VAT Return under MTD you must switch on the MTD functionality in Sage.

Preparation

Before you try to activate the MTD for VAT submissions functionality in Sage, please check that:

  • You’ve successfully registered with HMRC for the MTD.
  • All non-MTD VAT returns have been submitted. You can’t switch to MTD if you have a draft, waiting or failed VAT return.
  • You have the correct VAT number entered in More > Settings > Accounting Dates & VAT.

Switch on the MTD functionality in Sage

  • 1. Go to More, then click Settings. In the Financial Settings section, click Accounting Dates & VAT.
  • 2. Scroll down to the Making Tax Digital section, then click Authenticate.
  • 3. Select the I am signed up with HMRC for Making Tax Digital check box, then click Authenticate.
  • 4. The GOV.UK website opens automatically. To allow permission for Sage to interact with HMRC on your behalf, click Continue when prompted.
  • 5. Sign in with your Government Gateway credentials.

If you’re a VAT agent, you must enter your new agent services account ID and password.

  • 6. When prompted, click Grant authority.

Once successfully authenticated, a prompt appears in Sage Business Cloud Accounting Start to indicate this. The authentication lasts for 18 months, after which time you’ll then need to re-authenticate again. The next time you go to create your VAT return for HMRC, it will submit under the new MTD system.

Error: We were unable to authenticate with HMRC

If the authentication process fails, you may receive this error message. This can be caused by one or more of the following:

  • The company VAT registration number you’ve entered in Sage Business Cloud Accounting Start isn’t linked to the Government Gateway user ID you authenticated with. To fix this, please enter the correct VAT number in More > Settings > Accounting Dates & VAT.
  • You’ve entered incorrect Government Gateway credentials when authenticating. Please check that the correct Government Gateway user ID or password have been used.