How to setup, create and submit VAT returns in Xero Accounting software.

If you have not come across this blog before or have not read the about me bio I am a qualified accountant who now consultants in finance/business systems in particular Microsoft Business Central.

So why are we talking about Xero?

I work with many systems not just business central and have many years of experience using and working with other smaller accounting packages such as Sage, Xero and Quickbooks.

A regular topic that I get asked to consultant on is VAT problems in the system.

This is mainly due to the user not understanding how to use the system and making user errors.

Xero is a popular accounting package in the UK and its easy to see why, its very user friendly and easy to use.

The monthly cost is not too expensive.

Lets walk through how to set up MTD in Xero

Step 1: Navigate to VAT Returns 

From the top ribbon click accounting and then reports. 

Click UK VAT Return. (If it is not set as a favourite it can be found under Taxes and Balances in Reports) 

Step 2: Set up MTD for VAT in Xero. 

Click the above field. 

Step 3: Connect to HMRC 

Xero will send you to the HMRC/GOV wesbite click continue.

Enter your Government Gateway User ID and Password and sign in.

 Step 4: Grant authority 

Once successful authorisation has happened Xero is now set up for MTD.

I have created an independent guide to setting up and submitting VAT Returns in Xero.

Including how to reconcile the VAT to the trail balance, with reconciliation tips if it does not balance.

The above MTD set up is taken from the guide.

You can purchase the full guide below.