Type in your feedback or product suggestions. Apologies if any of above is wrong peeps. In most cases, providing the error meets HMRCs conditions, you dont need to report it. By keeping your finances in order and all VAT related paperwork organised, mistakes can easily be rectified on future returns. Expert guide to CIS and new reverse charge rules, Getting started with client engagement letters, A fool-proof marketing strategy for accountants. Just had a client investigated. Where VAT becomes more complicated is when it comes time to file your VAT return. But obviously this amount is too high as historically he has been @ 16.5%. Here you pay VAT on your sales whether or not your customers have paid. The registered Armstrong Watson is a trading style of Armstrong Watson LLP, Armstrong Watson Audit Limited and Armstrong Watson Once HMRC has processed your return its status will change to Filed or Failed. Check the Include VAT Late Claims box to include late claims on the return, provided you have published your previous periods return. No outside of scope supplies in Box 6. 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. Stay abreast of any developments through reputable sources like the GOV.UK website, news websites and blogs like this one to ensure you dont fall foul of VAT errors. 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. You can unsubscribe anytime using the link in the footer of any of our emails.See our privacy policy. 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. 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. HMRC has announced a change to its current temporary reduced rate of VAT for hospitality, holiday accommodation and attractions industries. Here's how: You can track feature requests through theQuickBooks Online Feature Requestswebsite. Don't think there is much scope for leaving the FRS retrospectively though so afraid your client may need to bite the bullet on this one : https://www.gov.uk/hmrc-internal-manuals/vat-flat-rate-scheme/frs4100. If there are significant DRC sales then this can be very costly." Hold off on any claim until the C79 certificate proves you are the owner of the goods. I have a client who is registered on the flat rate scheme for VAT. how much VAT you charge to customers). registered office is 15 Victoria Place, Carlisle, CA1 1EW. How it works Given that many of the major and common purchases you make for your business include the standard rate of VAT (20%), its easy to assume that VAT can be recovered on every business expense. If there are significant DRC sales then this can be very costly. The scheme isn't to save VAT registered business money, but to save them the hassle of keeping proper records. Small businesses name Xero the most-loved accounting software for the second year in a row. You may wish to ask your adviser to do this sense check for you. For further information visit fscs.org.uk. 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. 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. Still undecided. Box 1 would then show 5,000. Simply enter in your Percentage Rate into our new Flat Rate VAT Return and Xero will calculate the right amounts for you. Website by Simon Pighills. Your email address will not be published. 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. You have up to four years to put things right. Purchases Record all your purchases as No VAT. How to fill in each box on your return 4. If you haven't moved to MTD for VAT, check your VAT transactions, then export your VAT return to file outside of Xero. 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 -. Were very pleased, too. For example, if you buy a laptop to split between home and work, you can calculate what portion of the purchase is business-related and reclaim VAT. Is that interpretation wrong?". We should all now know that Outside of Scope applies are not included in FRS turnover. 2023 Xero Limited. 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. With Postponed VAT Accounting wed generally think the initial overseas purchases be treated as zero rated because VAT is not assessed on the initial purchase, its assessed when it comes through HMRC/Customs agent in UK. Get up to speed on what information you must include on your VAT invoice . The most obvious choice being an accountant. . (PVA). It will be released well before you need to deal with your first VAT Return in the new year. Thanks in anticipation of a clear answer! Shout out to StartUpAcc for the reminder. Hi Astra, thanks so much for getting in touch. Make sure to highlight every new or unusual transaction so that you can be sure that its given the correct treatment. 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. Required fields are marked *. Armstrong Watson LLP is a limited liability partnership registered in England and Wales, number OC415608. Financial Education & Wellbeing Programme, Xero User News - End of HMRCs MTD soft landing period. Confirm the VAT No. 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. Run your flat rate MTD VAT return Before you start Check that your VAT scheme and VAT number are correct in your financial settings. And I'm now intrigued to know if the FRS VAT return I've just submitted now is technically wrong (though no tax loss). However, reaping the rewards whilst staying VAT compliant relies on you completing accurate VAT returns a task that isnt always straightforward. How the flat rate MTD VAT return works Run your flat rate MTD VAT return 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. So I should post invoices received from EC Suppliers with VAT Code Zero Rated Expenses as I would for invoices from non-EC Suppliers? Apply a Postponed VAT Accounting (PVA) adjustment. We have developed a PVA update in Xero. 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. However, It appears that may not be the correct thing to do. 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 :) 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. Therefore, its important that you get all paperwork in order and chase up any missing or late invoices before submitting your tax return. You cam leave the FRS whenever you want. 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. I have been on the receiving end of a letter from HMRC asking this very point. The changes associated with Brexit can be overwhelming, but were here to make them as easy as possible for you. At that point I stop looking and, of all things, would not start with OTS transactions. From 1 January 2021, controls will be placed on the movement of goods between the UK and the EU. Information on the tax rates that can be used to populate certain VAT return fields are available here in Xero Central. See below, or check out Xero Central for more information on creating VAT rates. Small businesses name Xero the most-loved accounting software for the second year in a row. The updates and changes that we implement are largely the results of the suggestions provided by users, just like yourself. Reporting - it just keeps getting better! trading If you dont have a Xero Certified Adviser, you can find one here. 10.8.1 Flat Rate Scheme 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. Label trading records by document (e.g. 10. invoices and receipts) so that you can easily pinpoint figures. Discover the Accounting Excellence Awards, Explore our AccountingWEB Live Shows and Episodes, Sign up to watch the Accounting Excellence Talks. By using xero.com, you accept our cookie notice terms. The new rate should be used instead of the 5% reduced rate that is in effect until 30 September 2021. The third and final episode in my HM Revenue & Customs blogging trilogy this week concerns a new capability were opening up today. Thanks Paul - that answer suits me. Thanks to the author for sharing such a great post. 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. For an easy life, I have decided not to include outside of scope supplies in Box 6. From 1st June 2022 businesses using the flat rate scheme for VAT face changes to the way in which they must treat import VAT that will have financial and practical implications for how they prepare VAT Returns. Hi Alan, thanks for your comment. 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. Code Zero Rated Expenses as I would for invoices from non-EC Suppliers strategy for accountants should. 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