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      What Is Making Tax Digital (MTD)?

      FreshBooks is MTD compliant as of April 1, 2019 with our MTD Portal. Making Tax Digital is an HM Revenue & Customs (HMRC) initiative designed to make sure the UK tax system is effective, efficient and simpler for taxpayers. All VAT-registered businesses with a taxable turnover above £85,000 are required to keep digital financial records and send returns using MTD-compatible software as of April 1, 2019. Our MTD Portal also maintains a digital link with your transactional history, and will continue to be acceptable to the HMRC.

      A MTD Account is required in order to file your VAT Returns with the HMRC. You can create an account or log into an existing account, and submit returns as needed with the below details.

       

       

      Create your MTD Account

      The below steps will allow you to connect with a Making Tax Digital integration, set up your VAT Profile with your Government Gateway login, and enroll in the MTD program if you haven't done so already:

      Connect to Making Tax Digital

      If you’re an Accountant, you can access the MTD Portal via the VAT Return Report instead. Otherwise, set up your connection to the MTD Portal with these steps:

      1. In your FreshBooks account, click on the gear icon in the top corner
      2. Click on Apps & Integrations
      3. Then in the FreshBooks MTD integration, click on the Install Now link
      4. In the Connect to FreshBooks MTD window, click on the Allow button to authorize FreshBooks MTD to access your FreshBooks account information
      5. Proceed to the Configure your VAT Profile steps below to continue your setup.

       

      Configure your VAT Profile

      1. You will now see the Making Tax Digital portal, next to Step 1, click on the Configure your VAT Profile link
        Making tax digital portal with steps to complete inside account.
      2. In Edit your VAT Profile, enter your VAT Number in the field provided
        Edit vat profile screen with fields to fill out.
      3. Next, for your Accounting Method, choose between Cash or Accrual
      4. Then under Your HMRC Authorisation, click on the Authorise Now link, a new browser window will open
      5. Click Continue
      6. In the new HMRC browser window, click on the Continue button and then click on the Sign into Government Gateway button
      7. Enter your Government Gateway user ID and Password (or if you don’t have one, click on the Create sign in details link instead)
      8. Click on the Give permission button to finish setting up the connection
      9. Then in the FreshBooks authorisation confirmation page, click on the Close window button and proceed to the Enroll in Making Tax Digital for VAT steps below.

       

      Enroll in Making Tax Digital for VAT

      1. In the Making Tax Digital portal, next to Step 2, click on the Enroll in Making Tax Digital for VAT with the HMRC link
      2. In the new HMRC browser window, select Yes, I have accounting software and click Continue
      3. Then select Yes, my software submits through Making Tax Digital for VAT and click Sign in
      4. Enter your Government Gateway user ID and Password if needed
      5. Then enter your Access Code and click Continue
      6. Enter your VAT Number from your VAT registration certificate
      7. Complete the rest of your MTD registration by providing details on your business
      8. Next, enter your business' email address and click Continue
      9. Confirm the email address and click Continue again
      10. Check your email for the verification email, and click on the link to verify it
      11. Read and accept the terms of participation by clicking on the Accept and continue button.  HMRC will then confirm within 72 hours if you can start submitting VAT Returns under MTD. If you’ve registered as a business, you can continue to use your existing Government Gateway user ID and password credentials.

      Your MTD Account is now set up and is ready to submit returns to HMRC directly.

       

      Access Your MTD Account

      To access your MTD Account anytime after completing the setup, use the below steps:

      1. In your FreshBooks account, click on the Integrations section
      2. Then click on FreshBooks MTD underneath.

       

      Click on the Actions button to do any of the following:

      • Submit a Return - Upload your CSV and submit your VAT Return for your business to the HMRC directly
      • Past Submissions - View all your previously submitted VAT Returns and any responses from the HMRC
      • Liabilities - Access your current VAT liabilities
      • Payments - View your VAT payment history
      • Settings - Edit your VAT Profile and your HMRC Authorisations as needed

       

      Submit a Return

      To submit your MTD Return, use the below steps: 

      1. In your FreshBooks account, click on the Integrations section
      2. Then click on FreshBooks MTD underneath
      3. Click on the Start a Submission button
      4. Next to Period to file, choose a Period from the dropdown
        Submit a return section with dropdown showing period to file options.
      5. Your VAT Return Report will automatically be uploaded for you - confirm that your totals look correct
        VAT Return report with fields that can be edited
      6. If needed, click on the pencil icon next to any number to make adjustments to the total

        Edit icon next to a row.

        1. In the Notes field, specify the reason for the adjustment entry
          Make Adjustment section with fields to fill out to change totals.

        2. Next, add a positive or negative total in the Adjustment Amount field

        3. If needed, click on the + Add an Adjustment button to add additional adjustments

        4. Click Save Adjustment to finish

      7. Once you’re done reviewing your VAT Return, check off the box next to I confirm that this VAT period is finalised and includes all relevant transactions
      8. Click on the Submit button
      9. A confirmation will appear, and you can find your recent submission in the Past Submissions section under the Actions button. Viewing past submissions will also include the View PDF and Print button to save your submission offline.

       

      Notes on Adjustments:

      • Adjustments can be made for:
        • Late claims
        • Missing information from the current period such as income from other sources not captured in your General Ledger, sales and expenses made before you created your FreshBooks account, and anything else that was not captured properly in your FreshBooks account
        • Purchases made before your VAT registration date
        • Refunds on sales made in previous quarters’ submissions
      • Only boxes 1-2, 4, and 6-9 can be directly adjusted
      • To reverse an Adjustment, enter another Adjustment for the opposite amount

       

      FAQs

       

      The full list of FAQs can be found here (after signing into your MTD Portal).



      Where can I find my VAT Return Report? 

      To access your VAT Return Report anytime as needed, you can use the steps here.

       

      Can I use this to file my personal income (SA100)?

      The MTD Portal is for VAT/corporation tax only. Personal income can be filed using one of our integrations here instead.

       

      Why are my past filings missing and the MTD Portal is making me connect to the HMRC again?

      To ensure your data is secure, the HMRC authorization expires every 18 months. You can re-authorize again with the below steps: 

      1. In your FreshBooks account, click on the Integrations section
      2. Then click on FreshBooks MTD underneath
      3. Click on Submit a Return
      4. Then click on Authorize with HMRC
      5. In the new browser window on the HMRC website, click on Continue button
      6. Enter your Government Gateway User ID and Password then click Sign in
      7. Then enter your Access Code and click Continue
      8. Click on the Grant authority button to finish. Your connection will be re-authorized again and past filings will show up again in your MTD Portal if there are any.

      If you've forgotten your Gateway ID, you can reach out to HMRC's Online VAT Helpdesk here.

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