Converting a client to new accounting software

Move a client to new bookkeeping software at a clean break if you can: the end of the financial year, or at least the end of a VAT quarter. Bring across a reconciled trial balance at the conversion date, every unpaid sales and purchase invoice as an individual open item, and the client’s VAT settings, then keep the old records accessible. For Making Tax Digital, data must move by a digital link such as a file import, never by retyping or copy and paste.

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When is the best time to convert?

HMRC’s Making Tax Digital for Income Tax guidance says software can be changed at any time, but that it may be easier at the end of the tax year. The same logic applies to companies and to VAT. A financial year end gives a closing balance sheet that has been or will be reviewed for the accounts. A VAT quarter end means one system holds all the records for each return.

When a mid year move cannot wait, for example because the old package is being withdrawn or the client has outgrown it, choose a month end that is also a VAT period end, and finish and file the last return in the old system first. Avoid converting in the middle of a VAT period, because the return for that period would then draw on two systems.

What opening balances need to come across?

The starting point is a trial balance from the old system at the conversion date, reconciled before it is exported. Check in particular:

every bank, card and loan account agrees to a statement at that date;
the VAT control account agrees to the last return plus any VAT for the current period;
PAYE, pension and payroll control accounts agree to the payroll reports;
the director’s loan account and fixed asset register are up to date;
retained earnings agree to the last approved accounts.

For a mid year conversion there is a choice between a trial balance at the conversion date and importing the year to date transactions. A trial balance is quicker but leaves the new system unable to produce a full year’s reports. For sole traders and landlords within Making Tax Digital for Income Tax the choice is made for you: HMRC says that if software is changed during the tax year, digital records for the current tax year must be imported into the new software or recreated there. Quarterly updates are cumulative from the start of the tax year, so the new software needs every transaction from 6 April, not just balances.

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How should open invoices be handled?

Bring unpaid customer and supplier invoices across individually, with their dates, numbers and amounts, not as a single debtors or creditors balance. That lets receipts and payments be allocated in the new system, keeps credit control and statements working, and gives an aged list that agrees to the trial balance.

The VAT on those items needs care. Under standard accounting, VAT on an invoice issued before conversion has already gone on a return, so the imported item must not create VAT again in the new system. Most packages have a conversion or opening balance invoice type for this. Under the Cash Accounting Scheme, VAT on sales is paid when the customer pays and VAT on purchases is reclaimed when the supplier is paid, so the VAT on unpaid items has not yet been accounted for. Those items must carry their VAT into the new system so it falls into the return for the period in which payment is made. Getting this the wrong way round either drops or doubles the VAT.

What VAT history does the new system need?

VAT Notice 700/21 says VAT records should generally be kept for at least 6 years, and the digital records must include designatory data: business name, principal place of business, VAT registration number and any VAT accounting schemes used. Set the scheme correctly in the new software before the first return, whether that is cash accounting, the Flat Rate Scheme or annual accounting.

Past returns and their workings normally stay in the old system or an export from it; there is no need to rebuild them. What the new system does need is a connection to HMRC: compatible software must be able to send returns and receive information through HMRC’s API, and the obligations it pulls down should match the periods filed. Notice 700/21 also says an agent must have its own software or access to the software that holds the client’s records. If an error from a past return is found later, the method 1 limit is tested against box 6 of the current return, so the error can be corrected from the new system.

How do you keep Making Tax Digital continuity?

Notice 700/21 says that once data is in the software used to keep the electronic account, any further transfer must be by digital link. HMRC accepts CSV or XML import and export, file downloads and uploads, automated transfers and API transfers. It does not accept copy and paste, and manually rekeying figures from a printed report is not a digital link either. For Income Tax, HMRC adds that once a record has been sent in a quarterly update it must not be moved manually within or between software.

Other Income Tax points to check:

If the client uses bridging software, link the new bridging product to the records and remove the link from the old one.
Update periods cannot be changed for the rest of the tax year after a quarterly update has been sent, so set the new software to the same standard or calendar periods.
An agent authorises software through the firm’s agent services account and must repeat this every 18 months.
Digital records must be kept for at least 5 years from the submission deadline. HMRC’s example is that 2026 to 2027 records must be kept until at least 31 January 2033, so export the old data before the old subscription ends.

More on setting up the new product is in moving clients onto MTD software.

What about bank feeds and payroll?

Start the new bank feed on the day after the last transaction reconciled in the old system. Most feeds will offer to import history; accepting it creates duplicates of transactions already in the opening balance. Disconnect the old feed once the switch is confirmed. See bank feeds and bank rules.

Payroll is usually a separate system, and if it is not, changing it mid year has its own HMRC rules on year to date figures and payroll IDs, covered in changing payroll provider mid year.

What might a conversion timetable look like?

Illustration only. A VAT registered company on standard accounting with quarters ending March, June, September and December moves on 1 October:

When	Task
Early September	Set up new company file, chart of accounts, VAT scheme and supplier and customer lists
Early October	Reconcile old system to 30 September; export trial balance and aged debtor and creditor reports
Early October	Import trial balance; import open invoices as conversion items with no VAT effect
Early October	Connect bank feeds from 1 October; authorise HMRC connection
By 7 November	File the September quarter return from the old system
After filing	Agree new system trial balance at 1 October to old system; export old records for retention

What mistakes cause problems after the move?

Importing open invoices with VAT for a standard accounting client, so output tax is declared twice.
Dropping the VAT on unpaid items for a cash accounting client.
Accepting the bank feed’s history import and duplicating the conversion period.
Retyping figures from reports instead of importing files.
Letting the old subscription lapse before records are exported.

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Sources

Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 24 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.