1. Map every way a customer can pay
List business and relevant personal accounts, payment processors, online marketplaces and cash receipts. Export transaction-level reports with dates, references, gross charges, fees, refunds and payouts. Keep the original reports alongside your working file.
Give each customer receipt one identifier. Moving money from a processor into your bank must not create a second sale in the schedule. Check for manual invoices recorded separately from platform sales.
2. Reconcile gross receipts to the net payout
Illustration: customers pay £12,000, the platform refunds £400 and deducts £360 in fees, leaving £11,240 paid to the bank. The reconciliation is £12,000 less £400 less £360 = £11,240. Keep sales, refunds and charges visible rather than entering only the payout as turnover and then deducting the fees again.
This is a record-checking example, not a client case or a complete tax calculation. Confirm contractual arrangements, eligibility of expenses, VAT treatment where relevant and the timing of each item. A platform wallet can receive money before the later bank payout.
3. Explain credits that are not customer sales
Match transfers between your own accounts, personal funds introduced and loan receipts to supporting entries. Do not simply delete unexplained credits. Keep a separate list showing the evidence and reason for each classification.
Likewise, identify business payments received into a personal account. A separate business account can make reconciliation easier, but it does not replace the need to identify the underlying transactions.
4. Confirm the accounting basis before assigning the year
Cash basis is the standard method for eligible sole traders and partnerships without corporate partners, with exclusions. Traditional accounting remains an option. Limited companies cannot use this Income Tax cash-basis regime.
Under cash basis, record income received and expenses paid; unpaid invoices are not automatically current-year receipts. All payment methods matter, including payments in kind. Use a consistent receipt-recording method. Under traditional accounting, additional records include amounts owed to you, unpaid costs, stock and work in progress. Do not switch methods by using invoice dates for some receipts and bank dates for others.
5. Check transactions around 5 April
For the 2025/26 return, prepare a review of receipts and payouts around 5 April 2026. Include invoice date, customer-payment date, processor availability and bank-transfer date where relevant. Flag disputed, withheld or refundable sums for review rather than assuming the bank payout date decides everything.
Reconcile the resulting totals to the books and retain explanations of differences. Track unresolved records using our missing-records recovery guide.
Arrange a return quote with the reconstruction scoped
Tell us your trade, payment channels, approximate transaction volume, accounting basis and any gaps or earlier-year issues. We agree whether bookkeeping and reconciliation are needed alongside return preparation.
Personal tax services start from £400. UA Tax supports London and UK-wide clients. Get in touch for a scoped quote. This guide covers sole-trader preparation, with individual treatment depending on the facts.
For advice on your own circumstances, see our sole-trader tax return preparation service and agree the scope before acting.
Official sources and further reading
These primary sources support the framework above. Check the current version before acting because tax law and HMRC guidance can change.