Product update: MTD quarterly update accounting basis

You can choose between Cash Basis (money in/out) and Traditional (accruals) basis (invoice/bill dates) when sending quarterly updates to HMRC.

Cash basis Clear Books will include income and expenses based on the date that they are paid. Any unpaid income or expenses will be excluded from the quarterly update.

Traditional (accruals) basis Clear Books will include income and expenses based on the date on the invoices and bills. Invoices and bills will be included in the quarterly update whether they are paid or not.

To reflect the HMRC default when registering self employed businesses and property income sources with HMRC, this option defaults to the Cash basis. If you have opted to report using the accruals basis with HMRC, then you can choose this method once and Clear Books will remember that option for future quarterly updates.

The chosen basis will also be used to show the quarterly update totals on the dashboard.

Please note: If you only record paid income and paid expenses in Clear Books, then both methods will produce the same totals.

Preparing for your annual tax return

You can resubmit your quarterly updates as many times as needed.

This means you can submit your Q4 update as soon as you like after the quarter has ended, to fulfill the quarterly update obligation with HMRC. There is no requirement for the quarterly updates themselves to be complete or totally accurate. You then have plenty of time later to review and refine your digital records and resubmit the final update when you come to do your MTD tax return and ensure your tax calculation is accurate.