Where you record VAT on a cash basis, you are no longer allowed to process the customer receipts, directly from the bank statements. This would usually be processed by entering a bank receipt (calculating the VAT on the receipt at this point) and allocation the net amount to your sales nominal code/account code.
We have received confirmation that this is no longer allowed because the receipts, as shown on the bank statements, relate to various customers e.g. For example, credit card takings received on a certain day would appear as one bank receipt on your bank statements but relate to many individual customer sales.
To correct the entry process to be MTD compliant – you have 2 options:
- Process each individual sale receipt separately, accounting for the VAT on each receipt separately. i.e. break down each bank receipt seen per the bank statements into the separate transactions which make up the figure.
- Use a “takings control” to process the customer receipts in Sage/Xero and follow the approach suggested in the “Entering Sale Section” – to import the monthly “takings report figures” into Sage. If you do not currently use a takings control please find here step by step instructions on how to process the data into Sage. I would mention that point 2 is the report that should be imported from a csv version of the report in order to be MTD compliant.