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How to get your accounts in order for VAT filing

If your accounts are in order, filing your VAT return to HMRC from FreeAgent is as easy as checking the figures and clicking a button. But if you haven’t managed to stay on top of your accounts, this simple task can quickly turn into something a bit more arduous.

To save you from stress, here are five tips for getting your accounts in order for VAT filing with minimal effort:

1. Check your accounting dates

You need to enter three important dates when you set up your FreeAgent account:

Your company start date

For sole traders, this is when you began trading. For limited companies this is the company’s incorporation date.

Your first accounting year end date

Most sole traders and partnerships have an accounting year end date of 5th April to coincide with the end of the tax year (but this isn’t always the case, so if you’re not sure you should check with HMRC!). For limited companies, the year end date is usually a year from the month of the company start date - so if your company start date was 5th March 2018, your first accounting year end date was 31st March 2019.

Your FreeAgent start date

This is the date you started keeping your books in FreeAgent.

It’s important to get all these dates right so FreeAgent can calculate your VAT bill accurately. Follow our guide to setting your business’s accounting dates in FreeAgent to make sure you don’t run into trouble.

2. Check your initial VAT settings

All new businesses in FreeAgent are marked as ‘not registered for VAT’ by default so if your business is registered for VAT you need to enter details such as:

  • the date your business registered for VAT
  • your business’s VAT registration number
  • your first VAT period end date
  • whether your business is on any special schemes, such as the VAT Flat Rate Scheme

You can find all this information on the VAT certificate that HMRC sent you when you registered for VAT. You can check whether the VAT settings are correct for your business in FreeAgent by following our initial VAT settings guide.

3. Backfill your historical transaction data

If the transactions in your FreeAgent account don’t accurately reflect the money that came in and out of your bank account, the calculations for your VAT return won’t add up. FreeAgent’s powerful automation features - like our new Open Banking bank feeds, which automatically backfill your account with historical bank transactions - can help you sort this out with minimal hassle.

Your previous VAT returns in FreeAgent should also match the returns that HMRC have on record. Check out this article on how to check historical VAT returns to find out more. If your VAT returns don’t match, you will need to correct any errors before you file your next return.

4. Make sure you’ve registered for Making Tax Digital

HMRC’s new VAT filing system, Making Tax Digital (MTD) for VAT, is here! If your business is registered for VAT with VATable sales above the threshold (currently £85,000), you’re now mandated to file VAT returns through MTD. If you haven’t yet signed up for MTD for VAT, you’d better get going - signing up for MTD for VAT with HMRC can take up to a week.

5. Use our MTD First Aid Kit

Once you’ve registered for MTD, there are still a few things you need to do to ensure that you’re ready to file VAT through HMRC’s new MTD VAT system in FreeAgent when your VAT return deadline comes around. We’ve created this handy MTD First Aid Kit to walk you through everything you need to do to get your accounts ready for MTD VAT filing.

6. Stay on top of your accounts

The easiest way to make sure your accounts are in order is to keep them up to date throughout the year. FreeAgent has all the features you need to manage your day-to-day accounting with minimal hassle. With the FreeAgent mobile app you can stay on top of expenses, invoices and bank transactions on the go so your accounts will be ready and waiting for you to perform a final check when your VAT return is due.

Take a closer look at how FreeAgent can automatically generate and submit your VAT return to HMRC.

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