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Your Making Tax Digital (MTD) First Aid Kit

Are you trying to get ready for MTD for VAT but not quite sure where to start? No worries! We’ve handpicked some choice advice and articles to help make your transition to Making Tax Digital as pain-free as possible.

Getting your accounts in order ahead of filing your first MTD for VAT submission can sometimes seem a bit daunting, so we’ve compiled this handy MTD First Aid Kit to remedy some of the potential pain points in this process. Watch our Chief Accountant, Emily Coltman FCA, talk about the importance of prepping your books for MTD:

Are you an accountant? Check out our MTD for accountants support guide here

1. Double-check your accounting dates

Before diving into any other areas of your account, we’d strongly recommend checking your accounting dates and VAT settings. Your FreeAgent start date can have an impact on your VAT returns, so it’s important that you check that this is correct. We’d suggest paying particular attention to the first VAT return period end date in your VAT registration settings. You can find out more about all of these below:

2. Backfill your historical transaction data

In order to file your VAT returns, FreeAgent needs to have access to all the bank transactions, bills and expenses which match the dates of that VAT return. Do the best you can to manually upload bank statements, create bills and record expenses that cover that time period, and make sure that all of these transactions are explained correctly. If you have a bank feed set up to automatically import transactions, be careful not to duplicate any of these transactions with a manual import.

You might have data that you need to enter from a time prior to the period covered by  the MTD for VAT return that you’re filing. We recommend entering this data before you file your MTD for VAT return because as soon as you submit it, it will lock down earlier periods and make them non-editable.

If your books are proving a real challenge to update, your accountant may prefer to pick a date to start a clean slate from, and then create journal entries to cover transaction data prior to that date. If you don’t have an accountant at the moment, we’d highly recommend finding one from our approved accountant directoryAn accountant would also be able to help you with any end of year adjustments from previous years.

These articles will help you get your account settings in order:

These articles will help you backfill that historical transaction data:

3. Watch out for these common banking issues

Banking is one of the most powerful areas of FreeAgent, but it can sometimes prove to be one of the trickiest! If you use the banking area correctly, it will pre-populate much of your MTD for VAT returns for you. We’ve picked out some common banking tasks that can trip people up when preparing to file their MTD for VAT returns. Familiarising yourself with these should help prevent any future filing troubles:

4. File MTD for VAT!

Last but not least - make sure you’re correctly signed up for Making Tax Digital. This step is probably the easiest: you just need to sign up for MTD with HMRC and then connect that MTD account to FreeAgent! Read our detailed walkthrough on how to do that here:

 

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