In MTD IT, the taxpayer is always the Individual - the person. The Sole Trader business is treated as a source of income linked to that person.
So, when you set up a new sole trader client, you will usually see:
Individual - the person e.g., Adam
Sole Trader Business - the trading activity e.g., Adam Plumbing
This is intentional, because:
HMRC authorisation is tied to the individual taxpayer
the trading business is one (or more) income sources under that taxpayer
future expansion (e.g., adding property, multiple trades) becomes cleaner when the person is the parent.
Before you start:
Create/confirm the Individual record
Link/attach the Sole Trader business to that individual
Continue into MTD IT and authorise with HMRC
Common confusion:
A common issue can occur if you create the Sole Trader Business without correctly creating or linking the Individual.
If the business is not associated with the correct individual, you may experience issues when attempting to:
Complete HMRC authorisation.
Connect the client's MTD IT records.
Retrieve or synchronise the client's business information.
Manage additional income sources in the future.
Always make sure the Individual is correctly established as the parent record before proceeding with MTD IT authorisation..
Related Articles:
MTD IT – Client Authorisation Workflow
MTD IT - Linking Individuals and Sole Traders