Note: This error comes directly from HMRC's system due to the credentials provided in attempt to authorise Access Digital Tax as the application to use to perform VAT submissions in the new MTD method.
There are 3 possible causes:
Cause 1: ADT is not authorised correctly.
Cause 2: The business tax account for the VAT registration is not setup or enabled for 'Making Tax Digital' with HMRC.
Cause 3: There may be an issue or incorrect configuration on HMRC's side.
Solution for Cause 1:
Please re-attempt to re-authorise the Access Digital Tax instance.
Note: Ensure to use the correct/appropriate Business Tax Account HMRC gateway credentials to authorise digital tax.
Solution for Cause 2:
Navigate and log into the HMRC portal/gateway for the business tax account. A dialog about making tax digital appears.
Click the link to sign up for Making Tax Digital. Alternatively HMRC also allow sign up to be done over the phone.
Depending on the business structure, either the client can be signed up or an agent on behalf of the client. For clarity on this please discuss internally, and if required confirm with HMRC.
Note: It can take HMRC up to 72 working hours for set up to be completed and ready for use, however there could be times where it may take longer. If the obligation deadline is within this time-frame, it may be best to complete a submission via the old method first, and then signing up for Making Tax Digital at a later date. Once HMRC have this set up and it is ready for use, the error presented in Access Digital Tax should automatically disappear. If the error remains, at the bottom, click Re-authorise Access Digital Tax.
Solution for Cause 3:
If the business tax account is already signed up and ready for Making Tax Digital according to the HMRC portal/gateway, then we would highly recommend giving HMRC a call to explain the issue so they can investigate the configuration and set up of the account.
Also, it is possible that although all pieces are in place, HMRC may not have yet completed the process of converting the business tax account to be enabled for Making Tax Digital with them. One way to verify this is if it is still possible to use the "old way" of uploading VAT then the Making Tax Digital account is not fully operational and it will be necessary to wait until HMRC have completed the entire process.
Note: Unfortunately, this is not something The Access Group are able to assist on in any way, nor are we able to provide any contact details for HMRC or the names of the required departments.
One of the above solutions advised above will lead to the resolution of this error, as this would never be due to an issue from the Access side of things.