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. Use our flat rate Making Tax Digital (MTD) VAT return if you're on a VAT flat rate scheme. Thank you! It will be released well before you need to deal with your first VAT Return in the new year. Take care always, @klous1. Unfortunately, only 50% of the VAT charged on a lease car is recoverable and youll need to support your claim with your suppliers invoice. If your status is Failed, click on the VAT Return link to read the error message, or read the notification in your Xero inbox. https://www.gov.uk/guidance/the-vat-domestic-reverse-charge-procedure-no Interco transaction on asset under construction, Filing options for small companies up for change. You can then file your return as you would normally. Armstrong Watson Financial Planning & Wealth Management is a Registered as a limited company in England and Wales, number 7208672. 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. Thanks! HMRC are expecting Box 1 to be X% of Box 6. (PVA). Although I think you may be being a little harsh on our green friends. Yes, theres a slightly different way to handle PVA amounts on VAT returns in Xero if youre on a flat rate scheme please contact our friendly support team who will be able to give you a hand by providing you with specific details. ". 8. Any help on how to process this on a VAT return? His employer are now not paying the VAT on his invoices and paying them directly to HMRC. 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. 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. You have up to four years to put things right. We just need to be able to enter the correct PVA VAT for each transaction/quarter without a messy workaround. 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) !! Were updating Xero with the necessary changes, to help your business or practice adapt. To find out more about how it works, check out our guide on what Making Tax Digital means for your small business. You must have JavaScript enabled to use this form. That said, I'd encourage you to send feedback or product suggestions from QBO where they will be sent directly to our engineers. invoices and receipts) so that you can easily pinpoint figures. Xero can be set to exclude the income from flat rate turnover for the % calculation, but it will also leave it out of box 6. Do I need to charge VAT to client for Freelancer? You can simply correct it by making adjustments on your next VAT return. Tide is not a bank. Hold off on any claim until the C79 certificate proves you are the owner of the goods. All content 2020 Armstrong Watson. 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. Armstrong Watson Financial Planning Limited is authorised and regulated by the Financial Conduct Authority. QUOTE: "My initial interpretation is that Outside of Scope supplies would count as "supplies accounted for outside the Flat Rate Scheme". This means that she over-claimed VAT in the amount of 300 in the VAT period ending March 31st. 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. Charging VAT on core business supplies such as stock and office supplies is a regular occurrence. While theres no sure-fire way of preventing mistakes, you can reduce your chances of needing to make an adjustment by understanding VAT and having a system in place that makes filing returns as stress-free as possible. We use cookies to make your experience better. This will help HMRC calculate your Monthly Postponed Import VAT Statement (MPIVS), which will be available in your HMRC portal. We use cookies to make your experience better. For further information visit fscs.org.uk. 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). 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. VAT is constantly evolving. There are also practical considerations as to how your accounting software will deal with the change and how you prepare the VAT Return. The This will help HMRC calculate your Monthly Postponed Import VAT Statement (MPIVS), which will be available in your HMRC portal. For example, lets say youre using the flat rate scheme with a flat rate percentage of 14.5% and a quarterly VAT inclusive income of 30,000. trading Be the first to hear about our webinars, new features and business tips to help you save time and money. 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. Enter the flat rate percentage which applies to your business. 6. You can also find out more on our. It can be really great for people like me who are looking for grabbing more knowledge about it. Errors that exceed the threshold must be reported and cannot be adjusted on a future VAT return. You can find a full list of MTDfV software on the GOV.UK website. registered office is 15 Victoria Place, Carlisle, CA1 1EW. Your email address will not be published. But obviously this amount is too high as historically he has been @ 16.5%. for more information on creating VAT rates. The scheme isn't to save VAT registered business money, but to save them the hassle of keeping proper records. 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. Your email address will not be published. how it happened, the date it was discovered and the amount of VAT involved), Include the value of the error in your VAT account. 2023 Xero Limited. Registered to carry on audit work in the UK by the Institute of Chartered Accountants in England and Wales. The good news is that as of today, Xero now supports the Flat Rate Scheme and we promise to keep it simple for you. 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. Top Tip: Good bookkeeping helps you keep tabs on your day-to-day financial data, monitor your cash flow and evaluate your success. We have separate instructions for our MTD VAT return or Flat rate MTD VAT return. Firm Required fields are marked *. 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. 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! 2023 Xero Limited. 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? 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 new flat rates for types of businesses can be found on the HMRC website. Hi Roxanne, thank you very much for bringing this to our attention. Small businesses name Xero the most-loved accounting software for the second year in a row, Heres the more specific link to Gov.uk guidance on this https://www.gov.uk/guidance/vat-reduced-rate-for-hospitality-holiday-accommodation-and-attractions#accounting-for-supplies-that-straddle-the-temporary-reduced-rate. To reclaim VAT on any business expense, you must provide evidence in the form of a VAT invoice. Youll then be notified of whether the amount you calculated is correct and how much interest or tax you owe. If you do not have a tax rate of 12.5%, you can easily create one. Xeros function for postponed VAT accounting calculations specifically state that they wont work with the flat rate scheme so currently the easiest way to account for import VAT is to refer to your monthly PVA statements and then manually adjust the VAT Return via a journal. To join the flat rate scheme your turnover must be 150,000 or less (excluding VAT), and you must apply to HMRC. Monitor your VAT account in an accounting system. 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. Apply a Postponed VAT Accounting (PVA) adjustment. HMRC has announced a change to its current temporary reduced rate of VAT for hospitality, holiday accommodation and attractions industries. If you realise youve entered the wrong figures on your VAT return, try not to stress. All you need to do is write to VAT and let them know. 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 :) Theres a few changes to your VAT rates required so please take care to check with your accountant to ensure you know the rules, such as the VAT reporting requirements you need to be mindful of if you switch mid-quarter etc., and then switch on the FRS from the Financial Settings page in Xero. Box 6 is not only FRS turnover alone, which some sources state it is. 4. Box 6 is the problem for me. Run your flat rate MTD VAT return Before you start Check that your VAT scheme and VAT number are correct in your financial settings. 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 ). If you have any questions or need support, dont hesitate to reach out to our support team who are available 24/7. 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