Submitting a VAT return from Sage under Making Tax Digital

Making Tax Digital requires the return to go from your accounting software straight to HMRC. The mechanics are straightforward; the care goes into checking the figures before you press submit.

1. 1

   Confirm the period and calculate

   Go to the VAT module and choose the correct period dates. Click Calculate VAT Return. Sage picks up every transaction in the range that has not already been reconciled.

2. 2

   Check for late entries from earlier periods

   Sage includes unreconciled transactions dated before the period start. Review these — they are usually legitimate late invoices, but occasionally they are a mistyped year.

3. 3

   Review the detail behind each box

   Click into Box 1, 4, 6 and 7 and scan the transaction lists. Look for zero-rated items sitting in a standard-rate tax code, and for anything with an unusually large value.

   Tip: A quick sanity check: Box 6 multiplied by your standard rate should be roughly Box 1 for a typical trading business. A big gap means a tax code is wrong.

4. 4

   Reconcile the return

   Click Reconcile. This flags all included transactions so they cannot be picked up again in a later period. Take a backup first.

5. 5

   Submit to HMRC

   Click Submit Online. Sign in with your Government Gateway credentials when prompted and grant Sage authority — this authorisation lasts 18 months and then has to be renewed.

6. 6

   Post the VAT liability journal

   After submitting, Sage offers to post the transfer from the VAT control accounts to the VAT liability account. Accept it, then record the payment to HMRC against that liability when it leaves the bank.