Configuring VAT settings in AccBooks AI

Overview

Before AccBooks can prepare or file your VAT returns, you need to configure your VAT settings. This takes around five minutes and only needs to be done once.

Step 1 — Enter your VAT number

Go to Settings → VAT → VAT number and enter your 9-digit UK VAT registration number (format: GB 123 4567 89). AccBooks validates the number against the HMRC VAT checker automatically.

If you’re not yet VAT-registered, leave this field blank. AccBooks will still track VAT on transactions but won’t offer filing functionality until a number is entered.

Step 2 — Choose your VAT scheme

AccBooks supports all common UK VAT accounting schemes:

Scheme	Best for
Standard (accrual)	Most businesses — VAT is due when invoices are raised
Cash accounting	Businesses where cash flow is critical — VAT is due when payment is received
Flat rate	Small businesses with turnover under £150,000 — you pay a fixed % of gross turnover
Annual accounting	Pay VAT monthly in advance, with a final balance at year-end

To select your scheme, go to Settings → VAT → Scheme. If you’re changing schemes mid-year, set the effective date so historical returns use the correct method.

Step 3 — Set your filing frequency

UK VAT returns are usually filed quarterly, though some businesses file monthly or annually:

• Quarterly — most common. Returns are due one month and seven days after the period end.
• Monthly — available on request from HMRC if you typically receive VAT repayments.
• Annual — only available under the Annual Accounting Scheme.

Set your filing frequency under Settings → VAT → Filing frequency and enter your first period start date.

Step 4 — Connect to HMRC (Making Tax Digital)

MTD for VAT requires you to file returns digitally via HMRC-recognised software. AccBooks is HMRC-recognised.

To connect:

1. Go to Settings → VAT → HMRC connection.
2. Click Connect to HMRC.
3. You’re redirected to the HMRC Government Gateway login page.
4. Sign in with your Government Gateway credentials (the ones you use on gov.uk).
5. Grant AccBooks permission to submit VAT returns on your behalf.
6. You’re redirected back to AccBooks. The connection status changes to Connected.

The HMRC connection token lasts 18 months. AccBooks reminds you when it’s due to expire.

Step 5 — Set your VAT default accounts

AccBooks uses these nominal codes for VAT entries:

Account	Default code	Purpose
VAT on sales (output)	2200	Tax collected from customers
VAT on purchases (input)	2201	Tax paid to suppliers — reclaimable
VAT liability (net)	2202	Balance owed to or from HMRC

If you’re using a custom chart of accounts, map these under Settings → VAT → Nominal codes.

Step 6 — Configure flat rate scheme (if applicable)

If you’re on the Flat Rate Scheme, you need to enter your flat rate percentage:

1. Go to Settings → VAT → Flat Rate Scheme.
2. Enter your sector’s flat rate percentage (shown on your HMRC flat rate confirmation letter).
3. Tick First year discount if you registered for VAT in the last 12 months (the rate is reduced by 1% in your first year).

AccBooks uses this percentage to calculate your VAT liability on each return automatically.

Domestic reverse charge (construction)

If your business is in the construction sector and is subject to the domestic reverse charge (DRC), enable it under Settings → VAT → Domestic reverse charge. AccBooks will automatically flag qualifying transactions and populate boxes 1, 4, 6 and 7 of your return correctly.