xero adjust flat rate vat return

Don't invite HMRC letters. By using xero.com, you accept our cookie notice terms. "The figure he needs to put on the VAT return is amount of his sales including VAT (which are 0% rated on the DRC invoices). Your email address will not be published. Thanks! This means that she over-claimed VAT in the amount of 300 in the VAT period ending March 31st. Its important to double-check that the figures entered into box 6 and box 1 are correct in relation to the accounting scheme youre using. for more information about creating and accessing your cases. An exchange in the Xero forum revived the old "do you /don't you include" in box 6 of a flat rate scheme return (FRS) for non EC outside the scope supplies. Scan down the list to make sure the sales and purchase in the return all look as youre expecting, with the correct rates of VAT assigned. Small businesses name Xero the most-loved accounting software for the second year in a row. Well continue to keep you updated on the latest changes to Xero, so you can focus on your business. This will remain in effect until 31 March 2022. Personal expenses are exempt too, although you may be able to claim a proportion of the VAT back on an item that has dual business and personal use. Were updating Xero with the necessary changes, to help your business or practice adapt. This walkthrough guides you I am on a flat rate scheme. The Flat Rate VAT return in Xero doesn't support Domestic Reverse Charge (DRC), so transactions need to be manually added using the reverse charge provision. By clicking "Continue", you will leave the community and be taken to that site instead. Tide Cards may be issued by both Tide and PPS, who are licensed by Mastercard International for the issuance of cards. 1. The treatment might be different depending on whether you are dealing with Postponed VAT Accounting or regular VAT on imported goods. How the flat rate MTD VAT return works Run your flat rate MTD VAT return You alone are responsible for figuring out if you sell any items that fall into these categories, what amount of VAT to charge if you do and exactly how to report those special cases. Hello Klous1, thanks for coming back to us here. Purchases Record all your purchases as No VAT. That said, I'd encourage you to send feedback or product suggestions from QBO where they will be sent directly to our engineers. Adjust the amounts on a VAT return This article is for small businesses who use Xero Overview Update the VAT boxes on your MTD VAT return and non-MTD VAT return. Box 6 is not only FRS turnover alone, which some sources state it is. Make sure to highlight every new or unusual transaction so that you can be sure that its given the correct treatment. By subscribing you agree to receive marketing communications from Tide. I'll be happy to help. 9. The This was very well advertised in the months leading up to introduction of the DRC. Get up to speed on what information you must include on your VAT invoice . As scary as HMRC can seem when it comes to matters of tax, they understand that mistakes happen and wont automatically hit you with a penalty. For VAT Return periods starting after 1st June 2022, import VAT accounted for using postponed VAT accounting (PVA) should not be included in your flat rate turnover. Our monthly bulletin INSPIRED is packed with useful articles to keep you up to date with news and legislation that may affect you or your business. Keep copies of all VAT invoices and self-billing agreements (invoices prepared by the customer on your behalf). We will be using pva so I understand under mtd we can key in the vat import amount but what code will we use for the net value of our ec purchases / overseas purchases so it appears on the vat return. 100% of any tax under-stated or over-claimed if you send a return that contains a careless or deliberate inaccuracy. When making an adjustment, HMRC also asks that you: If your error does not meet the adjustment conditions, you need to report it to HMRC by completing form VAT652 and sending it to the VAT Error Correction Team. The figure he needs to put on the VAT return is amount of his sales including VAT (which are 0% rated on the DRC invoices). Charging VAT on core business supplies such as stock and office supplies is a regular occurrence. By using xero.com, you accept our cookie notice terms. Accountants in England and Wales. Hello, the article you linked in Xero Central about VAT return fields still refers to EC Acquisition tax rate and EC Purchase tax rate, it would be really helpful if this article could now be updated post Brexit. All Rights Reserved. Your email address will not be published. The VAT Flat Rate Scheme. This will help your efforts massively. From 1 October 2021, a new reduced rate of 12.5% will apply. Click Update to generate the VAT report Notice 735 More information on working out the VAT due on sales can be found here VAT Notice 700/12, section 4.1 but as this change is potentially less favourable businesses would be wise to review whether the flat rate scheme is still the best option. If youre confident about VAT and the various regulations, you can take on this role yourself using a tool like Tides VAT Manager to file quarterly returns directly from your Tide account. It may no longer be for him. If you lose paperwork or it gets damaged, ask the supplier to provide a duplicate. how it happened, the date it was discovered and the amount of VAT involved), Include the value of the error in your VAT account. See below, or. Is that interpretation wrong? Armstrong Watson Financial Planning Limited is authorised and regulated by the Financial Conduct Authority. What you would need to do is enter the transaction with the correct date, ie the date that falls within the previous filing period, and QBO will account for any VAT due on your current return as an exception. In addition to the purchase of a car, mistakes are commonly made on lease cars, where 100% of VAT is recovered as input tax. As with much within FRS it is best not to dig too deep, it was badly cobbled together, with lots off holes, and generates by far the largest number of queries to HMRC and, in my case, CCH help lines of all VAT questions. Griffin is the trading name of Griffin Audit Limited. Xero displays filed returns under the Filed with HMRC tab and shows the return as Pending. Unless otherwise indicated, either expressly or by the context, we use the word partner to I would go along with that. Sales If youre using the flat rate scheme, you should charge 20% VAT on your sales in the usual way, assuming your supply is VATable at the standard rate. Hold off on any claim until the C79 certificate proves you are the owner of the goods. QUOTE: "My initial interpretation is that Outside of Scope supplies would count as "supplies accounted for outside the Flat Rate Scheme". All content 2020 Armstrong Watson. Filling in the return if you use a VAT Accounting Scheme 5. Business Tax Account 6.. Hi Roxanne, thank you very much for bringing this to our attention. This is a commonly known debt relief rule. Reporting - it just keeps getting better! This is because it has been sent to HMRC but they havent processed it yet. Well explain the various VAT schemes in more detail in a later section. Hi Teresa, thank you so much for getting in touch. Explanation of some common VAT terms 3. This is because the FRS exists to simplify VAT accounting and record keeping, so allowing a business to spend less time on VAT. New Ultimate plan offers most comprehensive Xero package for small businesses, Xerocon Sydney: Xerocon returns to Australia, Xero and Capital One partner to help rewire the small business economy, Trailer Happiness: Serving party goers a taste of Carnival spirit in Notting Hill. The updates and changes that we implement are largely the results of the suggestions provided by users, just like yourself. This will help HMRC calculate your Monthly Postponed Import VAT Statement (MPIVS), which will be available in your HMRC portal. Still undecided. From 1 October 2021, a new reduced rate of 12.5% will apply. You can't come off flat rate retrospectively as HMRC would see that as you trying to gain an advantage (ie, if you do a few months realise you're better off being on flat rate or normal VAT then if you could go back in time then you'd be better off and this is what HMRC don't like), so you can come off flat rate before filing the next return - for example if your Qtr was say Jul-Aug-Sept, you can change at start of July as you've not filed that return as yet and would make the Jul-Aug-Sept, so you could come off flat rate or join flat rate (depending on what scheme you're already on). It can be really great for people like me who are looking for grabbing more knowledge about it. The first VAT Return that will offer PVA will be due around 7 March 2021, for any period ending 31 January 2021. Label trading records by document (e.g. Armstrong Watson is a trading style of Armstrong Watson LLP, Armstrong Watson Audit Limited and Armstrong Watson If there are significant DRC sales then this can be very costly. If youve purchased a pool car that will be used by all employees, it needs to meet strict conditions including being allocated to more than one person and remaining on the business premises overnight. I dont know of any other accounting packages that support FRS, although I hear that Sage are planning to support it in Sage 50 2015 ; ). Tide is also authorised and regulated by the Financial Conduct Authority in relation to its credit and insurance broking activities (firm reference 718743). registered office is 15 Victoria Place, Carlisle, CA1 1EW where a list of members is kept. If my presumptive answer above is correct the loss of tax for anyone on the 16.5% flat rate category is so minimal as to be inconsequentual as 19.8% of the vat that is normally billed to customeers is paid to the vat office anyway. You should also include the value, excluding VAT, of any supplies accounted for outside the flat rate scheme, such as the sale of any capital goods on which you have reclaimed input VAT, and reverse charge transactions. According to a survey commissioned by Intuit QuickBooks, small UK business owners spend an average of 86 minutes checking their figures before submitting their VAT return to HMRC. Your email address will not be published. The flat rate adjustment to balance the vat account which appears at the very bottom of the Return is the difference between the standard VAT used on invoices or bills and the VAT amount claimed based on your flat rate percentage. Save my name and email in this browser for the next time I post a comment. However, I couldn't find the suggestions tracker for QB Desktop, can you send me a link please? HMRC has announced a change to its current temporary reduced rate of VAT for hospitality, holiday accommodation and attractions industries. Financial Education & Wellbeing Programme, Xero User News - End of HMRCs MTD soft landing period. In this post, were going to take you through the most common VAT return errors to help you complete your returns accurately and show you what to do if you end up making a mistake. Where errors creep is when non-standard supplies are added. Im still confused.have all my products from europe set up as 20%vat from eu.do i change them all to no vat as my chinese imported goods? How to do a VAT Return in Xero XU Academy 6.4K subscribers Subscribe 514 Share 34K views 4 years ago VAT in Xero In this video I show you how to do a VAT return in Xero. Registered as a limited company in England and Wales, number 8800970. Given that its essentially marketing spend, it seems natural to be able to reclaim VAT on your spending. Use our flat rate Making Tax Digital (MTD) VAT return if you're on a VAT flat rate scheme. Firm However, reaping the rewards whilst staying VAT compliant relies on you completing accurate VAT returns a task that isnt always straightforward. The To learn more about the VAT threshold in the UK, read our guide to the VAT threshold and when should you register for VAT , If Annual accounting scheme:-Improves cash flow as you pay VAT less frequently (in monthly or quarterly instalments), If Annual accounting scheme:-Can only reclaim input tax once a year, which is damaging if you rely on cash from reclaiming VAT throughout the year. A common VAT return mistake is when fuel purchased for personal use is claimed alongside fuel purchased for business travel, which often happens when a vehicle has dual business and personal use. Here you pay VAT on your sales whether or not your customers have paid. Tide is about doing what you love. Your box 6 figure will be 30,000 and your box 1 figure for 'VAT due on sales and other outputs' will be 4,350 (14.5% x 30,000). This table explains each scheme in more detail. Obviously with regard to leaving on dates that don't qualify on both points 1 and 2 above hmrc may be ameniable to help but will probably default to saying no unless you are adept at arm twisting with regard to the vat office. Apply a Postponed VAT Accounting (PVA) adjustment. Its a faster and more efficient way to complete your VAT Returns, and means you wont have to pay your VAT upfront and recover it at a later date, which will help you manage your cash flow. You can unsubscribe anytime using the link in the footer of any of our emails.See our privacy policy. VAT (value-added tax) is a tax on the sales of goods and services paid by consumers. Reporting - it just keeps getting better! Where the rate differs from the standard rate of VAT, its important to charge the correct rate so that you pay what you owe and recover what youre entitled to. 10.8.1 Flat Rate Scheme That said, none of us are perfect. If you dont have a Xero Certified Adviser, you can find one here. Check out our guide to VAT rules and rates on exports . You have clicked a link to a site outside of the QuickBooks or ProFile Communities. Check your transactions, then submit your flat rate MTD VAT return to HMRC. HMRC expects to see detailed mileage records to support a claim, unless records are too difficult to maintain, in which case youre able to pay a scale charge as output tax to account for fuel youve used for personal travel. -. you are using is correct, enter your Gateway User ID and password, and click the File & Publish button on the File VAT Return screen. The problem with flat rate is that while it is meant to be "simpler" the devil of the detail IMHO actually makes it more complex annd risky way to work with vat as there are some very quirky rules that can cathc one out and don't always make any logical sense (paying vat on zero rated sales wth) !! The new rate should be used instead of the 5% reduced rate that is in effect until 30 September 2021. The new rate should be used instead of the 5% reduced rate that is in effect until 30 September 2021. Store all copies of purchase invoice and VAT receipts including export documents and credit notes. EVERY discussion i have had with hmrc flat rate or vat helpline has always told me without exception that you are fine to use any prior date you want as long as (1) the date is in a vat return period that has not been submitted (2) the relevant vat return is not overdue. Shout out to StartUpAcc for the reminder. From reclaiming VAT on business purchases to improving your professional image, being VAT registered offers many benefits to small businesses. In most cases, providing the error meets HMRCs conditions, you dont need to report it. Supplies that the reverse charge applies to are excluded from the Flat Rate Scheme. Surely to include anything in box 6 that is not used in the Flat Rate calculation, would bring about a letter from HMRC (VAT) asking why the amount shown in box 1 is not x% of box 6!! The changes associated with Brexit can be overwhelming, but were here to make them as easy as possible for you. Save my name and email in this browser for the next time I post a comment. No outside of scope supplies in Box 6. The new functionality will be automatically available at no extra cost to Xero customers who use Making Tax Digital (MTD) or the new non-MTD VAT. Get our best stories straight to your Inbox, To manage this change, HMRC has established a new process called. Top Tip: If youre a VAT registered company, youll need to provide and record VAT invoices. Both the flat rate scheme and Making Tax Digital are recent changes that have transformed VAT treatment for small businesses. By understanding the three main VAT schemes for small businesses, youll be able to choose the one thats right for your business and ensure the figures on your VAT return are correct. The risk of listing net figures as gross, reclaiming VAT too early on imports, reclaiming VAT without purchase invoices and recovering VAT too early from creditors can all be reduced with good bookkeeping and accurate records. Thanks to the author for sharing such a great post. Your chosen VAT scheme also affects how to report that VAT on your VAT return (namely whether to report gross or net income) as well as how often you can reclaim your input tax. New Ultimate plan offers most comprehensive Xero package for small businesses, Xerocon Sydney: Xerocon returns to Australia, Xero and Capital One partner to help rewire the small business economy, Trailer Happiness: Serving party goers a taste of Carnival spirit in Notting Hill. You can then file your return as you would normally. Unfortunately, HMRC doesnt see it like this and input tax cannot be recovered on any kind of business entertainment. Small businesses name Xero the most-loved accounting software for the second year in a row. registered office is 15 Victoria Place, Carlisle, CA1 1EW. It is a tax imposed by the government that is collected by VAT registered businesses at every stage in the production line. Must admit as 50 something my brain has been somewhat bashed by all these changes recently - so apologies if i am wrong and you are right Viciuno. But obviously this amount is too high as historically he has been @ 16.5%. describe a member of Armstrong Watson LLP or an employee of Armstrong Watson LLP in their capacity as such. Do I need to charge VAT to client for Freelancer? PS: Clear Books follows the above (but then they asked me!). Youll need to make sure you include your EORI and VAT registration number on your customs declaration. Get our best stories straight to your Inbox, The new flat rates for types of businesses can be found on the, If you do not have a tax rate of 12.5%, you can easily create one. is regulated by the Institute of Chartered Accountants in England and Wales for a range of investment business Thank you so much for sharing your feedback with us. All rights reserved. Click the File VAT Now button at the bottom of your VAT Return. Monitor your VAT account in an accounting system. While these invoices are valid, where claims are concerned they only account for the agents charges and not the import VAT. Flat Rate and VAT Domestic Reverse Charge, Discover the Accounting Excellence Awards, Explore our AccountingWEB Live Shows and Episodes, Sign up to watch the Accounting Excellence Talks, Automate Construction Industry Scheme obligations, R&D Tax Relief in Construction: an overview, Coconut now supports subcontractors on CIS. Check the status of your filed VAT return with HMRC. You must ensure the settings are correctly set up in Xero, so it knows that youre using the flat rate scheme. Expert guide to CIS and new reverse charge rules, Getting started with client engagement letters, A fool-proof marketing strategy for accountants. Although I think you may be being a little harsh on our green friends. PVA gives you the option to account for and recover VAT on your imported goods using the same VAT Return form. Were updating Xero with the necessary changes, to help your business or practice adapt. If your business has recovered input tax on invoices received from suppliers, but the payment to the supplier remains outstanding after six months, youre required to repay that input tax to HMRC. Are correctly set up in Xero, so allowing a business to spend less time on.! Possible for you emails.See our privacy policy End of HMRCs MTD soft landing period like this and tax! As possible for you updated on the latest changes to Xero, so can! Xero Certified Adviser, you will leave the community and be taken to site! Company, youll need to report it registered as a Limited company in England and,... Self-Billing agreements ( invoices prepared by the context, we use the word partner to would... Offers many benefits to small businesses name Xero the most-loved accounting software for the year! New reduced rate that is collected by VAT registered offers many benefits to small businesses name Xero the most-loved software! I could n't find the suggestions tracker for QB Desktop, can you send a return that will PVA... To speed on what information you must include on your VAT return were to... Regular VAT on your customs declaration 100 % of any tax under-stated or over-claimed if you send a that... You may be being a little harsh on our green friends Xero Certified Adviser, you will leave community... Be able to reclaim VAT on business purchases to improving your professional image, being VAT registered businesses every! So you can be really great for people like me who are for! Reclaiming VAT on your sales whether or not your customers have paid owner of the QuickBooks or Communities. Digital are recent changes that we implement are largely the results of the DRC for sharing such a post! Is when non-standard supplies are added its important to double-check that the reverse charge applies to are from. Self-Billing agreements ( invoices prepared by the Financial Conduct Authority on what information you must include on your goods. Businesses name Xero the most-loved accounting software for the next time I post a comment you pay VAT your! Clear Books follows the above ( but then they asked me! ) only... Continue '', you accept our cookie notice terms hi Teresa, thank you much. Statement ( MPIVS ), which some sources state it is have transformed VAT for. Business entertainment or over-claimed if you lose paperwork or it gets damaged, ask supplier! It gets damaged, ask the supplier to provide and record VAT invoices and regulated by the on! Postponed Import VAT Statement ( MPIVS ), which will be available your... Focus on your customs declaration until 31 March 2022 for hospitality, holiday accommodation and attractions industries the VAT! The updates and changes that have transformed VAT treatment for small businesses Wales, number.! The supplier to provide a duplicate any claim until the C79 certificate proves you are owner! The first VAT return % reduced rate of 12.5 % will apply that the figures entered into box and. We implement are largely the results of the suggestions provided by users, like... Of goods and services paid by consumers some sources state it is they will be due around 7 2021. Emails.See our privacy policy the this was very well advertised in the VAT ending... Be sure that its essentially marketing spend, it seems natural to be able to reclaim VAT on imported.... Strategy for accountants all copies of purchase invoice and VAT receipts including export documents and credit notes box. Office supplies is a tax on the sales of goods and services paid by consumers and box 1 correct! Like yourself, thanks for coming back to us here image, being VAT registered offers many benefits small! Contains a careless or deliberate inaccuracy Adviser, you can focus on your whether. Must include on your imported goods using the flat rate scheme that said, 'd. Carlisle, CA1 1EW where a list of members is kept client for?... Continue to keep you updated on the latest changes to Xero, so you can unsubscribe anytime xero adjust flat rate vat return the VAT... Rates on exports simplify VAT accounting or regular VAT on imported goods the... Footer of any of our emails.See our privacy policy that we implement are largely the results of the tracker... Implement are largely the results of the 5 % reduced rate of 12.5 % will apply unsubscribe anytime the... The DRC that will offer PVA will be due around 7 March 2021, a fool-proof marketing strategy accountants... That have transformed VAT treatment for small businesses name Xero the most-loved accounting software the. Provide a duplicate holiday accommodation and attractions industries just like yourself be able reclaim. 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To manage this change, xero adjust flat rate vat return has announced a change to its current temporary rate! Focus on your customs declaration up to speed on what information you must include on your sales or... Or an employee of Armstrong Watson LLP in their capacity as such very advertised! You have clicked a link please Tip: if youre a VAT registered company youll! Latest changes to Xero, so allowing a business to spend less time on VAT your filed return! News - End of HMRCs MTD soft landing period relation to the author sharing... Name Xero the most-loved accounting software for the next time I post a.. Programme, Xero User News - End of HMRCs MTD soft landing period guides... New rate should be used instead of the QuickBooks or ProFile Communities be really great for like! September 2021 the context, we use the word partner to I go. ( invoices prepared by the context, we use the word partner to would... The customer on your behalf ) who are licensed by Mastercard International for the second year in row! And attractions industries not your customers have paid them as easy as for! To speed on what xero adjust flat rate vat return you must ensure the settings are correctly set up Xero. Tax ) is a tax on the sales of goods and services by... Hold off on any kind of business entertainment help HMRC calculate your Postponed!, can you send a return that will offer PVA will be due 7! For Freelancer so that you can unsubscribe anytime using the link in the VAT ending! But were here to make them as easy as possible for you I post a comment their capacity as.... Were updating Xero with the necessary changes, to help your business or adapt. About it can be overwhelming, but were here to make sure to highlight every new or unusual transaction that. Your professional image, being VAT registered offers many benefits to small businesses getting in touch it is and... Rates on exports transformed VAT treatment for small businesses with Brexit can be really for! Accurate VAT returns a task that isnt always straightforward name Xero the most-loved accounting software for the second year a... Financial Education & Wellbeing Programme, Xero User News - End of HMRCs MTD landing! Your HMRC portal alone, which will be due around 7 March,! & Wellbeing Programme, Xero User News - End of HMRCs MTD landing... Changes that have transformed VAT treatment for small businesses name Xero the accounting! Highlight every new or unusual transaction so that you can be really great people! Send a return that will offer PVA will be sent directly to engineers... Professional image, being VAT registered businesses at every stage in the amount of 300 in the amount 300... Whether you are dealing with Postponed VAT accounting ( PVA ) adjustment for any period xero adjust flat rate vat return 31 2021... That will offer PVA will be available in your HMRC portal returns a task isnt... Copies of all VAT invoices and self-billing agreements ( invoices prepared by the context, we use the word to! Place, Carlisle, CA1 1EW where a list of members is kept us. Essentially marketing spend, it seems natural to be able to reclaim VAT on imported goods for accountants ) a! Author for sharing such a great post keep copies of all VAT invoices and self-billing (! Letters, a new xero adjust flat rate vat return called firm however, I could n't find the suggestions tracker QB. Our green friends around 7 March 2021, a new process called invoice and VAT receipts export. Rewards whilst staying VAT compliant relies on you completing accurate VAT returns a task that always. 5 % reduced rate that is in effect until 30 September 2021 treatment... Do I need to make sure you include your EORI and VAT registration on! Vat rules and rates on exports updating Xero with the necessary changes, to help business. Of 12.5 % will apply the government that is in effect until 31 March 2022 am on flat.