NAQIXMTD VAT software: preparing the 9-box return from your books
Making Tax Digital for VAT asks two things of a VAT-registered business: keep your VAT records digitally, and send the return through compatible software over an unbroken digital trail. An ERP can do the first and prepare the second. Here is how to build the nine boxes from your books and hand them on cleanly.
What Making Tax Digital for VAT requires
Since April 2022, Making Tax Digital (MTD) has applied to all VAT-registered businesses in the UK, whatever their turnover, unless they hold an exemption. In practice it means three things:
- Digital records. Your sales and purchase records, and the VAT on them, are kept in software rather than on paper.
- Digital links. Where figures move between programs on the way to the return, they move digitally, for example by file export and import. Retyping totals breaks the chain.
- Compatible software for submission. The return is sent through MTD-compatible software that talks to the government's VAT service.
These can be the same program or several. A common arrangement for growing businesses is an ERP that keeps the records and prepares the return, plus bridging software or an agent that submits it. Confirm the current rules and any exemption that might apply to you with your accountant.
The nine boxes in plain language
| Box | What it holds |
|---|---|
| 1 | VAT due on sales and other outputs |
| 2 | VAT due on acquisitions of goods from the EU (Northern Ireland goods only) |
| 3 | Total VAT due (box 1 plus box 2) |
| 4 | VAT reclaimed on purchases and other inputs |
| 5 | Net VAT to pay or reclaim (the difference between boxes 3 and 4) |
| 6 | Total value of sales and other outputs, excluding VAT |
| 7 | Total value of purchases and other inputs, excluding VAT |
| 8 | Supplies of goods to the EU (Northern Ireland goods only) |
| 9 | Acquisitions of goods from the EU (Northern Ireland goods only) |
Boxes 6 to 9 are entered in whole pounds. For a business in Great Britain, boxes 2, 8 and 9 are normally zero. Reverse-charge purchases, such as services bought from abroad, usually appear in boxes 1, 4, 6 and 7 together, so the net effect is often nil for a fully taxable business, but they still need to be there.
Where small-business returns usually go wrong
- The wrong period. VAT quarters follow a stagger. A business whose quarters end in February, May, August and November that prepares a calendar quarter will file the wrong figures.
- Drafts and cancelled invoices. Only issued invoices and credit notes belong on the return.
- Services from abroad. Software subscriptions and advertising bought from overseas suppliers with no VAT charged are often missed. They usually need VAT self-assessed under the reverse charge.
- Items outside the scope of VAT. Wages, loans and some other payments do not belong in boxes 6 and 7 even though they leave your bank account.
- Foreign-currency sales. An invoice in euros or dollars must be converted to sterling consistently. Use the rate on the invoice and keep it.
Digital links and bridging software
If your books live in one program and the return is sent by another, the figures must travel by a digital link. Exporting a file from your accounting system and importing it into bridging software is the usual way to do this. Copying numbers by hand from one screen to another is not. Bridging software then sends the nine values with the period key for the return you are filing.
Your period key is the short code that identifies each VAT obligation. Your bridging software or agent can show your open obligations; make sure the key you enter matches the period you prepared.
How NAQIX prepares the 9-box return
In NAQIX, the MTD VAT Return report is built from the same posted documents as your ledger. You choose a quarter, a month or custom dates, and set "VAT quarters end in" to match your stagger. The report then shows:
- boxes 1 to 9, with boxes 6 and 7 in whole pounds and boxes 2, 8 and 9 marked as Northern Ireland goods only;
- the documents behind boxes 1, 4, 6 and 7, so you can open any invoice, credit note, bill or expense that makes up a figure;
- a "how the boxes were built" explanation of output and input VAT;
- a "Self-assessed purchases" table listing bills and expenses from suppliers abroad that carried no VAT, with the VAT self-assessed and the rate used, for you to check before filing.
When you enter your period key, NAQIX exports the figures as a bridging CSV, one row per box, or as a JSON file of the nine values, ready for your bridging software or agent. NAQIX does not submit the return to HMRC. Filing happens in your MTD bridging software or through your agent, after your accountant has reviewed the figures. If you sell to the EU, note that the EC Sales List report shows "Not required" for a company in Great Britain.
The NAQIX page for the United Kingdom sets out the same position, and the Tax & compliance and Accounting & reports pages list the related features.
A quarterly review routine
- Close the month for the last month of the quarter, so nothing more can be posted into it.
- Run the 9-box report for the quarter and compare box 1 and box 4 with your VAT control account.
- Open any box that moved sharply against the previous quarter and read the documents behind it.
- Check every self-assessed purchase and correct the source document if the treatment is wrong.
- Export the file, import it into your bridging software and compare the nine values on both screens.
- Have a second person review before the return is sent, and keep the export with your records.
The routine takes less time each quarter, because the questions your reviewer asks become checks you run while posting.