Two different things travel through the software
A quarterly update is a set of totals: income and expenses added up by category for each business, every three months. HMRC receives the totals, not the transactions behind them, and an update is not a tax return.
The tax return is the annual submission. Your other income sources are added before it goes, the adjustments are made, and it is submitted from the software that holds the records, with the tax paid by 31 January.
What HMRC recognition means
HMRC does not approve software and does not recommend one product over another. For Making Tax Digital it publishes a find software service, and a product appears there because it meets HMRC's requirements for that service: it can create and store the digital records, work with the update periods, and send the submissions it claims to send.
Recognition is therefore a statement about meeting a specification. It is not a judgement about whether the product suits a trade, whether it is good value, or whether HMRC thinks you should use it, and HMRC says plainly that it does not endorse or recommend any particular product.
Why the return cannot be a paper exercise
The whole scheme rests on the figures HMRC holds being traceable to the records they came from. A return assembled by hand from a box of receipts breaks that chain, and the digital link rules exist precisely to stop it: no retyping, no copy and paste, and any transfer between products done digitally.
That is also why the software has to do more than arithmetic. It has to hold the records that the quarterly totals and the return are both computed from, so the same figure is never assembled twice in two different ways.
Where TradeKit stands
TradeKit is MTD ready - recognised by HMRC (reference D4K6ZS) for Making Tax Digital for Income Tax. It creates the digital records as you work, sends the quarterly updates, and carries the figures into the tax return, so the return is submitted from the same place the records live.
CIS and VAT sit in the same app rather than a second system, which matters if you are paid under CIS and VAT registered at the same time. The reference number above is the one HMRC issued with the recognition, and it appears on our pages for that reason.