VT Cash Book

Sign up with HMRC for MTD for Income Tax

If you are not already signed up, see Sign up to MTD for Income Tax.

Open the existing VT Cash Book file for the business:

If you already enter transactions in VT Cash Book, you should continue using the same VT Cash Book data file. You should not need to change the way you enter transactions, other than to ensure that your records contain the required information for MTD.

If you are creating a VT Cash Book data file from scratch, select File > New Company > [Enter the name of the business] > [Choose the relevant chart of accounts template] > OK.

If you have not used VT before, please follow the steps in the relevant Quick Start guide before continuing:

•VT Transaction+ Quick Start

•VT Cash Book Quick Start

If you have more than one business, please refer to Multiple businesses for advice on managing your data files.

Set up taxpayer details

From the main menu, select MTD > Taxpayer, then click on each of the following:

•Type of entity - make sure this is set to Individual/sole trader.

•Name - defaults to the name in Company Properties (Set Up > Company Properties). The exact name is unimportant for MTD.

•NI and VAT numbers - enter your National Insurance number (If you already submit VAT returns, your VAT number will automatically appear here.).

Grant authority

•Grant authority: businesses, if you are an individual submitting your own quarterly updates

•Grant authority: agents, if you are an agent using an agent services account

Set the current financial year to within the current tax year

•If you have not set up any year-ends, [year not set] is displayed in the current financial year caption on the bottom of the screen:

Set the current financial year to within the current tax year as shown in Financial years and periods.

•If you have set up year-ends, make sure the current financial year is within the current tax year. If it is in the previous year, click on the current financial year caption and select Next:

Change from standard to calendar quarters

If your accounting period does not start from 6 April, change the reporting period option from standard to calendar.

Assign any unassigned accounts to tax categories

In VT Cash Book, the default income and expenses accounts for a sole trader/self-employment/property business are automatically assigned to the tax categories for the quarterly update.

Any new accounts will be detected for you to assign when generating the quarterly update. Alternatively, you can assign new accounts at any time as follows:

1.Select MTD > Self-employment quarterly update > Assign (or exclude) accounts to tax categories.

2.This opens the Trial Balance Analyser. For each unassigned account on the left, select an appropriate tax category on the right (or click Auto-Assign, which will automatically find and assign the related tax category if the names are similar) and click OK.

3.If you have renamed any of the default accounts, check that the tax categories they are assigned to are still appropriate and re-assign if necessary.

Note:

•Balance sheet accounts are not relevant to quarterly updates and therefore can be ignored (they are automatically assigned to a dummy category of 'Net assets' or 'Net liabilities').

•If you are submitting a quarterly update for self-employment and also have property accounts on the same file, the property accounts should be assigned to Excluded income or Excluded expense, and vice-versa.

•A quick way to view unassigned accounts is select Unassigned accounts/unassigned accounts with balances under Accounts to be listed.

Self employment

In the VT Cash Book file for the business, select MTD > Self-employment quarterly update then:

1.Select the business (only if you have more than one) by clicking Trade.

2.If your turnover for the tax year is likely to be less than £90k, select Short/summarised form > On. This simplifies the categories of expenses to a single category of 'total expenses'.1

3.Select the dates of the quarterly update by selecting Set current period to dates of update (For more information on this setting, please see Dates of quarterly update.)

4.Generate the quarterly update by clicking Submit.

(If a message appears that says 'Some accounts are not assigned to a tax category', this means you have created new accounts that are not assigned to tax categories. Click on OK to open the Trial Balance Analyser to assign them as shown above.)

A dialog opens displaying the quarterly update data to be submitted:

(If you want to view a breakdown of quarterly update figures by account, select Display breakdown of tax category balances by account.)

Click on OK then OK to next message to submit to HMRC.

The following confirmation message then appears:

To display the submitted quarterly update, select Self-employment quarterly update > Current submission, which should now show 'Submitted':

You can keep a copy of this by clicking Copy All and pasting to a spreadsheet, or clicking Print.

If there is a mistake in a submitted quarterly update, you should correct the mistake in VT Cash Book (to ensure that your digital records are correct) and then either:

•wait to submit the next quarterly update (if it is within the same tax year), which will include the correction as each quarterly submission is cumulative from the start of the tax year, or

•resubmit the quarterly update

If you have submitted your 4th quarterly update:

You should enter the corrections in VT Cash Book (to ensure that your digital records are correct) and then either:

•re-submit your 4th quarterly update (before doing your final declaration), or

•adjust the income and expenses figures in your year-end MTD tax software by the same amounts as the corrections in VT Cash Book.

This section is for VT Transaction+ users only. If you use VT Cash Book you can ignore this section.

It you use VT Transaction+ and use accruals basis (traditional) accounting, it is not mandatory to include accounting adjustments (such as prepayments and accruals) in the quarterly updates. The options to account for these adjustments are as follows:

If you have not yet submitted your 4th quarterly update:

You can enter the adjustments in VT Transaction+ before you submit your 4th quarterly update. The adjustments will therefore be reflected in the 4th quarterly update figures submitted, which your year-end tax software will retrieve from HMRC.

If you have submitted your 4th quarterly update:

You should enter the adjustments in VT Transaction+ (to ensure that your digital records are correct) and then either:

•re-submit your 4th quarterly update (before doing your final declaration), or

•adjust the income and expenses figures in your year-end MTD tax software by the same amounts as the adjustments in VT Transaction+.

In year adjustments

Although accounting adjustments do not have to be included in the quarterly updates, HMRC do not say that they have to be excluded. For example, you may want to prepare internal management accounts during the year with accounting adjustments.

This section is for VT Transaction+ users only. If you use VT Cash Book, you can ignore this section.

If you prepare your annual accounts on a cash basis, you do not need to do anything as cash basis is the default accounting basis.

If you prepare your annual accounts on an accruals basis, you need to confirm this at the end of the tax year. This confirmation can be made either in VT Transaction+, or the software you use for the Final declaration.

To make the confirmation in VT Transaction+, select MTD > Self-employment quarterly update > Options > Accounting basis > Accruals basis.

If you require an explanation of cash basis and accruals basis accounting, please see Cash basis and accruals basis accounting.