Making Tax Digital · Sole traders
How to run a monthly health check on your digital records
ONLY£15A MONTHA monthly review is easier when it has a clear finish line.
A monthly review is easier when it has a clear finish line. You are checking that the records cover the month, that the important differences are explained and that unresolved questions have owners. You are not trying to complete your entire annual tax return every few weeks.
Start with coverage and balances
List the bank accounts, payment accounts, cards and cash records used by the business. Check that imports cover the intended dates. A feed showing “connected” is not evidence that an earlier gap has been filled.
Compare the bookkeeping balance with the source statement where the system supports reconciliation. Identify pending payments, transfers, fees and cash movements. Do not add a balancing expense to make a difference disappear.
Move from transactions to questions
Clear straightforward categories, then make a short list of exceptions: a missing invoice, a customer overpayment, a private-use split or an unexplained credit. Give each item a next action. A question with an owner and a source reference is manageable; a vague “sort accounts” reminder is not.
Review any estimate after correcting the records. A sharp movement may reflect a duplicated import or missing costs, rather than a real change in the year's expected profit.
Worked example: a £125 difference
The month-end bank balance is £125 lower than the bookkeeping balance. A review finds an omitted £100 business purchase and a £25 personal withdrawal. Both need recording, but only the qualifying business purchase is an expense.
Adding a single £125 “miscellaneous expense” would make the balances agree while overstating the deduction. The reconciliation is complete when the cause is explained, not merely when the difference reaches zero.
A review that checks more than the total
Start with coverage: the correct person, business and period, plus all relevant accounts and cash records. Then look at completeness. A feed can be connected today while still missing an earlier week. Confirm the earliest and latest transactions against the source.
Next, inspect unusual items. Large transfers, loan receipts, refunds, net settlements and private purchases often need more context than a bank description provides. Check for duplicate imports where a statement overlaps a live feed. An automatic warning is useful evidence to investigate, not proof that the entry must be removed.
Finally, review category totals. A category unexpectedly showing zero, a large increase or a negative amount deserves an explanation. You do not have to make every annual tax adjustment at this stage, but you should understand the records behind the summary you approve.
HMRC explains what quarterly updates contain. Keep the approved version and the resulting acknowledgement together. If something later changes, correct the source record and use the software's supported update process so you can explain which figures are current.
Treat a tax estimate as a forecast
A bookkeeping profit is not necessarily your final taxable income, and an estimated liability is not always the amount still to pay. Employment income, pensions, savings, reliefs, tax already deducted and payments on account can all affect the final position.
An estimate is most useful when you understand its coverage. Check whether it uses year-to-date figures or projects a full year, whether all income sources are included and whether adjustments are still outstanding. A strong summer followed by a quiet winter should not automatically be projected as twelve identical months.
HMRC explains that estimates after quarterly updates can be incomplete when other income is missing or accounting periods do not align with the tax year. Read the estimate guidance within quarterly reporting.
Use a reviewed forecast to inform a cash reserve, then compare it with actual HMRC liabilities and payment dates. If you transfer money into a tax savings account, that transfer is not a business expense. If an estimate changes sharply, investigate the records and assumptions before assuming that your tax position itself has changed by the same amount.
Keep the reporting dates separate from payment dates
The standard first update for 2026/27 covers 6 April to 5 July 2026 and was due by 7 August 2026. The second covers 6 April to 5 October 2026 and is due by 7 November 2026. The third and fourth deadlines are 7 February 2027 and 7 May 2027. These are cumulative updates, not four isolated sets of three-month totals.
Calendar periods have different cut-offs and the same filing deadlines. Check the setting for each business rather than assuming the dates from a bank statement. HMRC lists both reporting calendars.
The annual return for 2026/27 is due by 31 January 2028. The earlier 2025/26 return normally remains due online by 31 January 2027. Keeping those years distinct avoids a common transition-year misunderstanding.
Payments on account, where required, follow their own January and July timetable. An update acknowledgement confirms a reporting event; it does not confirm that an outstanding tax bill has been paid. Check your actual HMRC account and payment obligations separately from the software's progress indicators.
Leave a useful handover
- Record the last date checked for each source.
- List remaining questions with amounts and references.
- Note any import gaps and who will resolve them.
- Keep the next quarterly deadline visible.
Repeat the same review next month. Consistency matters more than an ambitious promise to finish every month in exactly five minutes.
Take the next step
Avona.app offers a self-service route from £15/month. Bring your records together, review the figures and choose a workflow that fits your business. For professional help, discuss the scope and total price of Avona Concierge, managed by chartered accountants, before choosing a service.