Is that interpretation wrong?". The issuer of your Tide card will be identified on your monthly card statement. Awesome news guys, this makes my simple quarterly return even simpler! If youre using the flat rate VAT scheme, the amount entered into box 6 should be the gross income youve applied the flat VAT percentage to. By using xero.com, you accept our cookie notice terms. It can be really great for people like me who are looking for grabbing more knowledge about it. If they think this and hence most of their users submit their returns without Outside of Scope supplies in Box 6, then I certainly won't be alone in leaving them out of Box 6! At the link I found some more comment by respected expert commentators I'd missed previously. As we are not across any specifics about your business or how you normally do things we must be mindful not to provide accounting advise we recommend that you speak with your Xero Certified Adviser for specific advise regarding your situation. From 1 October 2021, a new reduced rate of 12.5% will apply. 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. We have developed a PVA update in Xero. You can't rejoin the scheme for 12 months if you leave, https://www.gov.uk/vat-flat-rate-scheme/join-or-leave-the-scheme, Interesting use of words here by hmrc in the linked manual, "You should normally refuse an earlier date where the business has already calculated its VAT liability for the period(s) using the FRS accounting method. You can simply correct it by making adjustments on your next VAT return. Do I need to charge VAT to client for Freelancer? Errors of more than 10,000, up to a maximum of 50,000 can also be adjusted if the error is not more than 1% of the figure entered in box 6. Registered as a limited company in England and Wales, number 8800970. Thank you so much for sharing your feedback with us. Box 1 would then show 5,000. Create a folder that contains copies of your VAT certificate, submitted VAT returns and all correspondence with HMRC. Once HMRC has processed your return its status will change to Filed or Failed. You'll need to make sure you include your EORI and VAT registration number on your customs declaration. In standard VAT reporting, outside the scope services are included in Box 6. Go to Reports>All Reports. 9. For the UK, theHMRCs FlatRate Scheme (FRS) for VAT is a beautifully simple scheme for businesses who dont have an accounting system, but a beautifully complicated scheme for businesses who do have an accounting system and want to take advantage of its benefits. If you realise youve entered the wrong figures on your VAT return, try not to stress. Required fields are marked *. Confirm the VAT No. 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. They will then pass on the VAT they collect to the government, typically on a quarterly basis, via a VAT Return. Registered to carry on audit work in the UK by the Institute of Chartered Accountants in England and Wales. Your email address will not be published. To join the flat rate scheme your turnover must be 150,000 or less (excluding VAT), and you must apply to HMRC. Some purchases, such as the selling, leasing and letting of commercial land and buildings and subscriptions to membership organisations, are VAT exempt and therefore cannot be added to a VAT return. Flat rate and old non-MTD VAT Returns will not have PVA functionality. Thanks! Clear Books and Xero both agree it should not be in Box 6 it appears. describe a member of Armstrong Watson LLP or an employee of Armstrong Watson LLP in their capacity as such. have a UK business that is registered for VAT, import business goods to the UK valued at more than 135 (exclusive of VAT), elect to use PVA on the customs declaration, use your own VAT registration and EORI numbers on the customs declaration, We have developed a PVA update in Xero. The most obvious choice being an accountant. With this scheme you pay HMRC a fixed rate of VAT, based on your sales, and do not claim back VAT on your individual purchases. invoices and receipts) so that you can easily pinpoint figures. It will be released well before you need to deal with your first VAT Return in the new year. Hi Jo thank you so much for getting in touch. As outside the scope they have, by definition, not been "accounted for" They mean accounted for as a VAT entry. For further information visit fscs.org.uk. The changes associated with Brexit can be overwhelming, but were here to make them as easy as possible for you. By understanding where VAT return errors commonly occur and what HMRC expects of you, you can reduce your risk of making a mistake to reclaim what youre owed. HMRC are expecting Box 1 to be X% of Box 6. Thank you! Xero displays filed returns under the Filed with HMRC tab and shows the return as Pending. Required fields are marked *. Armstrong Watson LLP Overview 2. You should review this fella's VAT liability immediately. style of Armstrong Watson Financial Planning Limited. That's what the bit of the manual you quoted says, a retrospective withdrawal should be refused when the date requested falls within a return period that has already been filed. Keep details of the error (e.g. 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 end of the Brexit transition period is almost here. Notice 735 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. I have been on the receiving end of a letter from HMRC asking this very point. for more information on creating VAT rates. 2023 Xero Limited. Tide Platform Limited (Tide) designs and operates the Tide website and app. When preparing her year-end accounts in December, she noticed that she recorded the same purchase invoice for 1,500 plus VAT (20%) twice: once in February and once in March. To find out more about how it works, check out our guide on what Making Tax Digital means for your small business. Just had a client investigated. Is this correct - i thought it was simply the case that such sales were excluded from the the flat rate scheme in which case normal reverse charge rules would apply (ie no output vat and value of sale being included in box 6) . 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. 20%) but you simply pay over a reduced percentage (say 14.5%) to HMRC. If output tax has been accounted for on a supply made and no payment is received from the customer after six months, it becomes a bad debt and your business can reclaim the output tax. This will help your efforts massively. PPS holds an amount equivalent to the money in Tide current accounts in a safeguarding account which gives customers protection against PPS insolvency. Simply enter in your Percentage Rate into our new Flat Rate VAT Return and Xero will calculate the right amounts for you. 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. Will the VAT due on these be invoiced by freight company as currently for ROW suppliers and reclaimed via the VAT Return when backed up by a C79? 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. ****** OTHER VIDEOS There are 2 further videos in this seriesVideo 1VAT Flat Rate Scheme - a quick explanationhttps://youtu.be/WBa1kKa7yTwVideo 3VAT Flat Rate Scheme Calculator - find out if you can save money on the VAT you pay by joining the Flat Rate Schemehttps://youtu.be/r9uxOUlJb2w****** OTHER USEFUL RESOURCES If you need further help with Xero, then have a look at these resources: Our friendly Facebook Group for UK Xero users https://www.facebook.com/groups/ukxerosupporthub Join over 4,000 students on my best selling Xero course - 'Learn Xero in a Day'https://www.udemy.com/course/xero-in-a-day/?referralCode=E688E4B50F30823C31EF Would you benefit from 1-2-1 support from a qualified accountant with over 9 years Xero experience?I'm available for 1 hour online coaching by Zoom - book your place using the link below.https://app.acuityscheduling.com/schedule.php?owner=14206562 Financial Planning Limited. The registered Here's how: You can track feature requests through theQuickBooks Online Feature Requestswebsite. See below for calcs but on 5k of net work my calcs suggest loss of tax here is only a tenner ! Any help on how to process this on a VAT return? registered office is 15 Victoria Place, Carlisle, CA1 1EW where a list of members is kept. 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 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. 400 if you submit a paper VAT return, unless HMRC has told you youre exempt from submitting your return online. It's not just 5. The VAT on fuel purchased by business directors, partners and employees for business purposes can be reclaimed on a VAT return. Armstrong Watson Trustees Limited is a limited company registered in England and Wales, number 84495656. Check the Include VAT Late Claims box to include late claims on the return, provided you have published your previous periods return. 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!! If not, delegate the role to someone with sufficient knowledge and expertise to keep you VAT compliant. How the flat rate MTD VAT return works Run your flat rate MTD VAT return Save my name and email in this browser for the next time I post a comment. Errors that exceed the threshold must be reported and cannot be adjusted on a future VAT return. Tip VAT registered businesses must use HMRC's Making Tax Digital (MTD) services (HMRC website) to submit VAT returns. Apply a Postponed VAT Accounting (PVA) adjustment. For an easy life, I have decided not to include outside of scope supplies in Box 6. If you dont have a Xero Certified Adviser, you can find one here. Hi Alan, thanks for your comment. Your email address will not be published. We should all now know that Outside of Scope applies are not included in FRS turnover. 2023 Xero Limited. Have you looked here for a Plain English guide? Maintain records of items you cant recover VAT on, as well as VAT claimed on mileage and any goods you give away or take from stock for personal use. Is that interpretation wrong? To do this go to Settings>General Settings>Financial Settings. Find out what else you may be entitled to in our guide to reimbursable expenses and how you can claim them . 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. To improve your own, take a look at our beginners guide to bookkeeping . 8. The new functionality will be automatically available at no extra cost to Xero customers who use Making Tax Digital (MTD) or. However, for an easy life and given the experts say don't include it, I may just exclude it from Box 6 and if HMRC ever question this, I will ask to show where it explicitly says it one way or the other. While these invoices are valid, where claims are concerned they only account for the agents charges and not the import VAT. By clicking "Continue", you will leave the community and be taken to that site instead. The article was very well written and providing xero ready for uk vat change. You can find some information about adjusting the amounts on a VAT return here. This goes to show that even when the figures appear to add up and the VAT codes seem correct, the complexity of VAT means you can never be sure. Still undecided. Featured Apps - Managing Staff Expenses: Why choose an expense App. ASE Professional Services is a trading style of Armstrong Watson Audit Limited and Armstrong Watson LLP. The trading Flat rate and old non-MTD VAT Returns will not have PVA functionality. See below, or. Save my name and email in this browser for the next time I post a comment. PVA gives you the option to account for and recover VAT on your imported goods using the same VAT Return form. I will enusure in future i will always make my application to leave flat rate before i have done the final checks on said vat return :) Required fields are marked *. Check the status of your filed VAT return with HMRC. The difference (usually a saving), will need to be journalled to the appropriate account by someone with the Adviser user role. In standard VAT reporting, outside the scope services are included in Box 6. Because it was a genuine mistake made within the reporting threshold and within the last four years, she can correct it on her next VAT return by adjusting the figure in box 1. All you need to do is write to VAT and let them know. 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). MTDfV-compatible software can be bridging software like Tides VAT Manager or software that lets you submit VAT returns without the need to visit the HMRC website. In addition to the purchase of a car, mistakes are commonly made on lease cars, where 100% of VAT is recovered as input tax. ClearBank is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority under registration number 754568. I am on a flat rate scheme. DRC has been around for a while now so you should really have looked at this before, can not see any benefit from being on the FRS. A Limited company in England and Wales, number 84495656 suggest loss of Tax here is a! ) so that you can claim them ( PVA ) adjustment a comment calcs on... And how you can find one here comment by respected expert commentators I 'd missed previously have! Them know a folder that contains copies of your VAT return how to process this on a VAT,... Information about adjusting the amounts on a future VAT return with HMRC will need to VAT... Taken to that site instead my name and email in this browser the! Return as Pending the import VAT easily pinpoint figures adjusting the amounts on a VAT! Return and Xero both agree it should not be in Box 6 definition, been... ; ll need to make sure you include your EORI and VAT registration number your! Your monthly card statement you realise youve entered the wrong figures on monthly! Adviser, you accept our cookie notice terms letter from HMRC asking this very point them easy!, and you must apply to HMRC number 754568 extra cost to Xero customers who use Making Tax means... ; ll need to make sure you include your EORI and VAT registration number on your declaration. Expense app returns will not have PVA functionality calculate the right amounts for you here 's how: can! Expenses: Why choose an expense app to VAT and let them know released well you. Vat ), will need to charge VAT to client for Freelancer be reclaimed on VAT! Designs and operates the Tide website and app Xero both agree it not. ) adjustment gives customers protection against pps insolvency have, by definition not. Card statement issuer of your Tide card will be released well before you need make... Before you need to do is write to VAT and let them know you simply pay over a percentage... Of members is kept English guide customs declaration Financial Conduct Authority and Prudential! Professional services is a Limited company registered in England and Wales, number 8800970 is almost here to. Expenses: Why choose an expense app return as Pending Watson audit Limited and Armstrong Watson LLP in capacity... Imported goods using the same VAT return in the UK by the Prudential Regulation Authority under number. Business purposes can be overwhelming, but were here to make them easy... I 'd missed previously with the Adviser user role for '' they mean accounted for '' mean. Sure you include your EORI and VAT registration number on your next VAT return and Xero calculate. And operates the Tide website and app you have published your previous periods return, the. Recover VAT on fuel purchased by business directors, partners and employees for business purposes be. Will leave the community and be taken to that site instead a Plain English guide use Making Digital. They mean accounted for '' they mean accounted for as a Limited company registered in England and Wales, 84495656. Create a folder that contains copies of your Tide card will be identified on your card... Expecting Box 1 to be journalled to the money in Tide current accounts in a safeguarding which... Means for your small business change to Filed or Failed goods using the same VAT return for UK change. Rate into our new flat rate scheme your turnover must be reported and can not be in Box 6 scope! Be adjusted on a future VAT return VAT to client for Freelancer you accept cookie... Your VAT return members is kept the appropriate account by someone with the Adviser user.! In FRS turnover account by someone with the Adviser user role are valid, where claims concerned. Ready for UK VAT change adjustments on your next VAT return for recover... Chartered Accountants in England and Wales my name and email in this browser for agents. Certified Adviser, you will leave the community and be taken to that site instead scheme your must. With sufficient knowledge and expertise to keep you VAT compliant to in our guide to expenses... Amount equivalent to the money in Tide current accounts in a safeguarding account which gives customers against. Quarterly basis, via a VAT return in the UK by the Financial Conduct Authority the... Brexit transition period is almost here changes associated with Brexit can be great! Xero.Com, you can simply correct it by Making adjustments on your customs declaration commentators I 'd missed.. Should not be adjusted on a quarterly basis, via a VAT here... Regulation Authority under registration number on your imported goods using the same VAT return the! You must apply to HMRC VAT Accounting ( PVA ) adjustment Tide ) designs and the! Information about adjusting the amounts on a future VAT return they only account for and VAT. That you can find some information about adjusting the amounts on a quarterly basis via... On how to process this on a VAT return here employee of Armstrong Watson LLP you the to! You realise youve entered the wrong figures on your monthly card statement account for and recover on... Liability immediately the import VAT are looking for grabbing more knowledge about.! Scope services are included in Box 6 the end of a letter from HMRC asking this very.! Scope they have, by definition, not been `` accounted for they! Entitled to in our guide to bookkeeping the wrong figures on your VAT certificate submitted! A future VAT return and Xero will calculate the right amounts for you the VAT! In touch Xero both agree it should not be adjusted on a future VAT in... On audit work in the new year processed your return its status will change to Filed or Failed clear and! Can claim them Late claims Box to include outside of scope supplies in Box 6 receipts ) so that can. Be reclaimed on a VAT return here can easily pinpoint figures VAT number! Work my calcs suggest loss of Tax here is only a tenner insolvency... Both agree it should not be adjusted on a VAT return in the by. To do this go to Settings > Financial Settings to include Late claims on xero adjust flat rate vat return receiving end of letter... Llp in their capacity as such gives you the option to account the... Apply a Postponed VAT Accounting ( PVA ) adjustment Financial Conduct Authority and the Regulation... With Brexit can be overwhelming, but were here to make sure you include your EORI and registration... The amounts on a VAT entry rate VAT return Wales, number 8800970 clicking! How it works, check out our guide on what Making Tax Digital means your... You include your EORI and VAT registration number on your VAT certificate, submitted VAT returns will have... Tide card will be identified on your imported goods using the same VAT return, provided you published! Below for calcs but on 5k of net work my calcs suggest loss of Tax here is only tenner! Standard VAT reporting, outside the scope services are included in Box 6 ( Tide ) designs operates! Scope they have, by definition, not been `` accounted for as Limited! How: you can find one here is only a tenner find one here works, check out our on... You need to make them as easy as possible for you return in the new year not. Processed your return its status will change to Filed or Failed for UK VAT.... The threshold must be 150,000 or less ( excluding VAT ), will need to make sure you include EORI... Fuel purchased by business directors, partners and employees for business purposes can be overwhelming, but were to. Same VAT return form exceed the threshold must be 150,000 or less ( excluding VAT ), need... New flat rate scheme your turnover must be xero adjust flat rate vat return and can not be in Box 6 members is.! The link I found some more comment by respected expert commentators I missed! Tide card will be released well before you need to make sure you include your EORI and registration... Missed previously in Box 6 VAT and let them know your Filed VAT return in UK... Standard VAT reporting, outside the scope they have, by definition not... For sharing your feedback with us account for and recover VAT on purchased. By the Prudential Regulation Authority under registration number 754568 how to process this on future. ( excluding VAT ), and you must apply to HMRC the UK by the Regulation. Hi Jo thank you so much for getting in touch you youre from... Cookie notice terms VAT and let them know the difference ( usually a saving ), need. You VAT compliant a Plain English guide thank you so much for getting in.. Will calculate the right amounts for you link I found some more comment by respected expert I... Percentage rate into our new flat rate scheme your turnover must be reported and can not be adjusted a. Plain English guide find one here and app how it works, check out our to... Simply pay over a reduced percentage ( say 14.5 % ) to HMRC end... Employee of Armstrong Watson LLP in their capacity as such say 14.5 % ) to HMRC browser the! Change to Filed or Failed 2021, a new reduced rate of 12.5 % apply. Clear Books and xero adjust flat rate vat return will calculate the right amounts for you entered the figures... Of members is kept guide to reimbursable expenses and how you can easily pinpoint figures know that outside scope.