VAT Returns On Xero And QuickBooks: The Step By Step Workflow BES Uses To Keep London Clients Compliant
- bes Accountancy Services
- Feb 5
- 5 min read
VAT should not feel like a quarterly fire drill. If you are a busy London business owner using Xero or QuickBooks, the biggest win is not a clever report, it is a repeatable workflow that keeps your books clean all year and makes VAT filing predictable.
Under Making Tax Digital for VAT, most businesses must keep VAT records digitally and submit VAT Returns using compatible software. The VAT Return deadline is usually one calendar month and 7 days after the end of your accounting period, and payment is usually due by the same date. When your numbers are messy, those deadlines create stress, rushed decisions, and avoidable risk.
Founded in 2020, BES Accountancy is a London based accounting company serving businesses across the UK, led by Besnik Vata, director of BES Accountancy, a London based accounting company, and supported by a dedicated team of five specialists. We help SMEs build reliable systems across bookkeeping, payroll, VAT, financial accounting, and accounts preparation for sole traders and partnerships, using Xero and QuickBooks to keep everything accurate, efficient, and compliant.
Need help now?
Call our director Besnik today: 07816264205
The BES VAT workflow in plain English
This is the workflow we use for London clients across agencies, trades, ecommerce, hospitality, clinics, and service businesses. The steps stay consistent, and the detail adapts to your transaction volume and VAT scheme.
Step 1, confirm VAT scheme and software settings before anything else
Before we touch the return, we confirm your VAT scheme, filing frequency, and the VAT settings inside Xero or QuickBooks. This includes checking the VAT rate mappings, default codes, and how your software is handling edge cases like deposits, refunds, and overseas transactions.
“Most VAT problems are not caused by the final submission. They are caused by small setup issues that quietly compound every week.”Besnik Vata, director of BES Accountancy, London
Step 2, build a weekly capture habit that protects your audit trail
We set a simple weekly routine so nothing is missing at quarter end. The goal is a complete digital trail for sales invoices, bills, receipts, and supporting evidence, organised so that you can answer questions quickly if HMRC ever asks.
Example:
A London trades business often has fuel, tools, and van costs scattered across cards and email receipts. Weekly capture prevents “lost VAT” and reduces time spent guessing later.
Step 3, reconcile the bank monthly, not at the deadline
Monthly reconciliation is where VAT accuracy is won. It reduces duplicates, finds missing items early, and ensures the software agrees with your real bank activity.
If your VAT return report does not match what you feel in your bank, you usually have one of these issues, unreconciled transactions, duplicates, missing purchase evidence, or income recorded without matching receipts.
Want to dive deeper into accounting for businesses?
Read our related blog, where we provide a full guide to submitting your File Your Tax Return Early.
Step 4, review VAT codes in high risk categories
Before we prepare the return, we review common high risk areas where incorrect VAT coding and mixed use mistakes are most likely.
Common examples include:
Fuel and mileage related spend
Meals and entertainment
Mixed business and personal use items
Large one off purchases and capital items
Imports and evidence for import VAT where relevant
This step reduces both underclaims and overclaims, and it is where many businesses feel immediate relief because the rules are finally applied consistently.
Step 5, draft the VAT Return and run reasonableness checks
We draft the return in Xero or QuickBooks and run “does this make sense” checks against prior quarters, seasonality, and known changes in your business. If something looks unusual, we trace it back to the transaction and correct it before filing.
“A clean VAT Return is not about perfection. It is about being able to explain every number quickly, with evidence.”
BES VAT workflow note for SME clients
BES Accountancy uses tools like Xero and QuickBooks to help clients prepare property tax forecasts, file returns, and avoid costly surprises.
Step 6, submit through software, keep digital links compliant
MTD requires digital record keeping and software filing. If you move data between systems, you must preserve digital links. HMRC does not consider copy and paste to be a digital link.
In plain terms, if you use spreadsheets anywhere in the process, the workflow must be designed so the transfer of data is still compliant. We set this up properly and document it, so you can demonstrate a tidy, traceable process.
Step 7, plan the VAT payment early to protect cash flow
Because the submission deadline is usually also the payment deadline, VAT should be treated as cash flow planning, not a surprise bill. We help clients forecast the likely VAT position before quarter end, then confirm the number once reconciliation and checks are complete.
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Why this workflow reduces errors and penalty risk
HMRC uses a points based system for late VAT return submissions. When you reach the threshold, you receive a 200 pound penalty, and you can receive further 200 pound penalties for continued late submissions while at the threshold.
In practice, most VAT issues that create rework and cost come from the same root causes, unreconciled banks, missing receipts, wrong VAT codes, duplicates, and last minute filing. The BES workflow removes these causes by keeping records current, reconciling monthly, checking high risk spend, and running a clear pre submission review.
For HMRC’s own overview of VAT Return deadlines and submission basics, see the guidance here.
Speak to a qualified accountant for tailored advice.
Call for a free quote: 07816264205 | Email for a free quote: Info@bestax.co.uk
FAQ:
How long does a VAT Return take if my Xero or QuickBooks is messy?
If the bank is unreconciled and receipts are missing, the work is usually in tidy up, not submission. A monthly workflow reduces the time sharply because issues are found early, not at the deadline.
What is the biggest cause of VAT errors in Xero and QuickBooks?
Unreconciled bank transactions and incorrect VAT coding, especially on meals, fuel, mixed use spend, and large purchases. A consistent review step prevents repeating the same mistake every week.
Can BES manage VAT deadlines for me?
Yes. We run a workflow that includes weekly capture, monthly reconciliation, pre submission checks, and deadline ownership, so filing and payment planning are not left to the last minute.
Do I still need to keep records if I have nothing to pay?
Yes. VAT registered businesses must submit a VAT Return even if there is no VAT to pay or reclaim.
Can you help if I use spreadsheets alongside software?
Yes, but it must be designed to preserve digital links. HMRC does not accept copy and paste as a digital link under VAT Notice 700/22.
About BES Accountancy
Founded in twenty twenty and based in London, BES Accountancy helps businesses and self employed professionals across the UK with bookkeeping, payroll, VAT, financial accounting, and accounts preparation for sole traders and partnerships. We work with Xero and QuickBooks and our values are availability, efficiency, trust.
Get a free quote by phone | Email Info@bestax.co.uk
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