This ensures the postponed VAT amounts required by HMRC are handled correctly. The 9. We are using QB Desktop as per the tag. In this video I show you how to do a VAT return in Xero.Its not just 5 clicks, you also need to do some checking before you submit the return.I show you step by step how to do these.The example in this video is for the Accrual/Standard VAT scheme2019 UPDATEThe Xero menus have been updated since this video was recorded.To access Financial Settings from the Dashboard you now choose:AccountingAdvancedFinancial SettingsTo access the VAT Return from the Dashboard you now choose:AccountingReportsTax - VAT ReturnTo access the Trial Balance Report from the Dashboard you now choose:AccountingReportsAccounting - Trial BalanceIn the UK you also need to be aware of the new rules for Making Tax Digital.You can read everything you need to know herehttps://www.xero.com/uk/resources/making-tax-digital/ If your status is Failed, click on the VAT Return link to read the error message, or read the notification in your Xero inbox. Posting the PVA amounts to the VAT return using our new feature will update Box 1 and Box 4 on the VAT return. Check the status of your filed VAT return with HMRC. With the ongoing situation around COVID-19 and Britains withdrawal from the EU (Brexit), as well as HMRCs drive towards making VAT easier for VAT-registered companies, theres likely to be new rules and regulations to come. https://www.accountingweb.co.uk/tax/hmrc-policy/domestic-reverse-charge- DRC transactions are not included in the flat rate calculation, so its not a case, like zero ring, where you end up paying over VAT for something that isn't VATable. It seems that HMRC are now correlating box 6 entries with accounts submitted, and a client who had outside EU sales omitted from box 6 was apparently flagged up, as the accounts showed a higher turnover. Thanks in anticipation of a clear answer! 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. Do I need to charge VAT to client for Freelancer? Top Tip: If your business exports goods and services, its important you learn how export VAT is charged in the EU and the rest of the world. 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. By subscribing you agree to receive marketing communications from Tide. Your email address will not be published. So, if your business takes a deposit or down payment from customers for goods or services, VAT is due when that initial payment is received, unless you have already issued an invoice. Shout out to StartUpAcc for the reminder. If not, delegate the role to someone with sufficient knowledge and expertise to keep you VAT compliant. Ive sent a request through to the team that looks after Xero Central and asked them to update it. If youve misplaced a VAT invoice and cant obtain a copy of it, HMRC may accept alternative evidence such as a bank statement showing that the payment was made to a supplier. 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. We have developed a PVA update in Xero. To join the flat rate scheme your turnover must be 150,000 or less (excluding VAT), and you must apply to HMRC. Your email address will not be published. The new flat rates for types of businesses can be found on the HMRC website. 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. But the rule has another side that often goes overlooked: you cant claim bad debt relief until after six months from the due date. Hi Teresa, thank you so much for getting in touch. Any help on how to process this on a VAT return? 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). Check the Include VAT Late Claims box to include late claims on the return, provided you have published your previous periods return. You may wish to ask your adviser to do this sense check for you. Do I need to charge VAT to client for Freelancer? To save you time on applying the reduced 12.5% VAT rate for every transaction, Xero enables you to set up default rates. Keep details of the error (e.g. Explanation of some common VAT terms 3. 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. By knowing where mistakes often take place you can easily avoid making them yourself. Hi Jo thank you so much for getting in touch. As a side issue how does other software handle outside the scope of UK VAT income for box 6? Awesome news guys, this makes my simple quarterly return even simpler! It might be best for you to speak with someone in our support team directly so they can give you a hand. 5. We have the VAT codes set up no problem, thanks (we used your page https://quickbooks.intuit.com/learn-support/en-uk/accounting/how-to-create-pvat-20-and-0-codes-in-qu ). PPS is a trading name of Prepay Technologies Ltd which is an electronic money institution authorised by the FCA under the Electronic Money Regulations 2011 under firm reference number 900010 for the issuing of electronic money. 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. 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. 2023 Xero Limited. By using xero.com, you accept our cookie notice terms. You can correct errors on any VAT return that relates to an accounting period that ended within the last four years if they: Making an adjustment is a straightforward process that you can do in one of two ways: For example, lets say a small business owner called Rachel is VAT registered under the standard VAT scheme and submits VAT returns every quarter. 10. Thanks to the author for sharing such a great post. HMRC has announced a change to its current temporary reduced rate of VAT for hospitality, holiday accommodation and attractions industries. Tide, the Tide logo, the Swell, and Do less banking are trademarks and trade names of Tide Platform Limited, and may not be used or reproduced without the consent of the owner. 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. Also include any amount you have entered in box 8. Keep copies of all VAT invoices and self-billing agreements (invoices prepared by the customer on your behalf). But obviously this amount is too high as historically he has been @ 16.5%. While these invoices are valid, where claims are concerned they only account for the agents charges and not the import VAT. We use cookies to make your experience better. activities. Required fields are marked *. Apply a Postponed VAT Accounting (PVA) adjustment. There is a not a massive inconsistency here as presumably hmrc give any business the benefit of the doubt that as far as they are concerned vat is not calculated till its submitted. Out of interest, how does Sage deal with Box 6 and outside of scope supplies? 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 ; ). 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. However, the general rule of thumb is no evidence = no claim. th QuickBooks Online, QuickBooks Self-Employed, QuickBooks ProAdvisor Program, QuickBooks Online Accountant, https://central.xero.com/s/article/Adjust-the-amounts-on-a-VAT-return#ApplyaPVAadjustment. 10.8.1 Flat Rate Scheme Placing someone in charge of dealing with VAT day-to-day will help to avoid any confusion around tax and ensure records are consistent. Perform the following steps to complete a VAT return: 3. If you do not have a tax rate of 12.5%, you can easily create one. https://www.gov.uk/guidance/vat-reduced-rate-for-hospitality-holiday-accommodation-and-attractions#accounting-for-supplies-that-straddle-the-temporary-reduced-rate. 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. -. Once HMRC has processed your return its status will change to Filed or Failed. All Rights Reserved. It can be really great for people like me who are looking for grabbing more knowledge about it. I can see how having this additional option and functionality would be helpful for you and your business. If you are on the flat rate scheme for VAT, but not quite sure how to complete the return in Xero, this is the guide for you! Both the flat rate scheme and Making Tax Digital are recent changes that have transformed VAT treatment for small businesses. The difference (usually a saving), will need to be journalled to the appropriate account by someone with the Adviser user role. PVA gives you the option to account for and recover VAT on your imported goods using the same VAT Return form. Well explain the various VAT schemes in more detail in a later section. HMRC advice was include ALL sales in box 6, or you risk an enquiry, even if that doesn't make sense as the sales are "outside the scope of UK VAT". 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. From 1 January 2021, controls will be placed on the movement of goods between the UK and the EU. Hi Roxanne, thank you very much for bringing this to our attention. Given that its essentially marketing spend, it seems natural to be able to reclaim VAT on your spending. Any help on how to process this on a VAT return? To reclaim VAT on any business expense, you must provide evidence in the form of a VAT invoice. how much VAT you charge to customers). Still undecided. The end of the Brexit transition period is almost here. The first VAT Return that will offer PVA will be due around 7 March 2021, for any period ending 31 January 2021. Thanks! Top Tip: If you dont already have an accountant and arent sure how to find the right one for your business, read our guide to choosing an accountant for your small business . Get our best stories straight to your Inbox, To manage this change, HMRC has established a new process called. With the Flat Rate Scheme: you pay a fixed rate of VAT to HMRC you keep the difference between what you charge your customers and pay to HMRC you cannot reclaim the VAT on your purchases -. The links you have provided are all for QB Online. Top Tip: Before you continue, its important that you understand the fundamentals of VAT, which you can learn about in our guide to everything you need to know about VAT . 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. Without getting into the full details, essentially the VAT paid on any import does not equate to exactly 20%, and each import will be a slightly different percentage (based on; exchange rate differences, assumed transportation cost and associated VAT, and customs own "VAT Adjustments" (whatever they are)). Therefore, its important that you get all paperwork in order and chase up any missing or late invoices before submitting your tax return. Required fields are marked *. 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