How FreeAgent Makes MTD for VAT Simple
Making Tax Digital (MTD) for VAT is here and it means a number of important changes to the way that businesses file and report their VAT.
If you run a VAT-registered business with a taxable turnover above the VAT threshold of £85,000, you are required to keep digital VAT records using MTD-compatible software like FreeAgent or Xero.
The new rules took effect from April 2019. To make life easier for busy business owners, FreeAgent has introduced a range of updates and improvements to their VAT filing system.
In this blog post, we detail some new features and functionality that will make the VAT process quick and simple.
Direct HMRC VAT Link
As well as keeping your VAT records, FreeAgent also allows companies to submit updates to HMRC directly from within the software.
Previously, final VAT returns had to be submitted via the HMRC website, but FreeAgent and other similar software packages now support the filing of VAT returns from the software in double-quick time.
FreeAgent also recently updated their reporting feature, allowing users to see which boxes on a VAT return has been affected by a particular transaction.
This is useful when you need to explain to clients where a figure comes from, without having to dig into the tax laws or using a calculator. This is the kind of feature that makes FreeAgent software far less taxing than more traditional bookkeeping systems.
VAT Deferrals on Income
Another recent change to the FreeAgent software means it can now support VAT deferrals on invoices and income transactions. This means that you and your clients can make corrections during locked periods.
This gives businesses more flexibility to edit invoices, bills, expenses and bank transactions in locked VAT periods, while the software automatically making any necessary adjustments to the next open VAT return.
Manual Adjustments to Boxes 6 and 7 on VAT Return
On your VAT return, boxes 6 and 7 represent the total value of sales and other outputs excluding VAT and the total value of purchases and all other inputs excluding VAT respectively.
FreeAgent automatically calculates these figures for you, but there may be occasions when you want to manually adjust these figures. Businesses used to be able to do this on HMRC’s VAT portal, but since returns are now submitted using MTD-approved software, this is no longer an option.
The new editing functionality means that you and your clients can file returns that include pre-registration costs, including when clients start using FreeAgent mid-quarter.
For more information about FreeAgent software and CloudAccountant's support packages, please speak to a member of our team. Call: 0808 281 0303.