. Tide is about doing what you love. 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. 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) !! It will be released well before you need to deal with your first VAT Return in the new year. 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. activities. The registered 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. This is because the amount that needs to be entered into box 6 depends on which VAT scheme youre using. Thanks to the author for sharing such a great post. By using xero.com, you accept our cookie notice terms. You can also find out more on our Brexit Hub. By using xero.com, you accept our cookie notice terms. 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! Visit our dedicated site for more resources, webinars and updates to help you navigate the COVID-19 pandemic. Top Tip: Good bookkeeping helps you keep tabs on your day-to-day financial data, monitor your cash flow and evaluate your success. 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 you haven't moved to MTD for VAT, check your VAT transactions, then export your VAT return to file outside of Xero. 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. "As outside the scope they have, by definition, not been "accounted for" They mean accounted for as a VAT entry.". Regarding box 6, it is only one sentence which I am bothered by (see in bold text below): Box 6 Total value of salesEnter the turnover to which you applied your flat rate percentage, including VAT. Any such supplies youve had and made should be accounted for under the reverse charge provisions.https://www.gov.uk/guidance/the-vat-domestic-reverse-charge-procedure-no khalm0 ClearBank is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority under registration number 754568. Save my name and email in this browser for the next time I post a comment. Have you looked here for a Plain English guide? This article was updated on Monday, 4th October 2021. Your email address will not be published. Apply a Postponed VAT Accounting (PVA) adjustment. It's not just 5. Will I still be able to use Xero for MTD when I buy from EU? This will help HMRC calculate your Monthly Postponed Import VAT Statement (MPIVS), which will be available in your HMRC portal. Supplies that the reverse charge applies to are excluded from the Flat Rate Scheme. 10. How the flat rate MTD VAT return works Run your flat rate MTD VAT return Tip VAT registered businesses must use HMRC's Making Tax Digital (MTD) services (HMRC website) to submit VAT returns. 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. 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! 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. 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. 5. From 1 October 2021, a new reduced rate of 12.5% will apply. Apologies if any of above is wrong peeps. Although I think you may be being a little harsh on our green friends. If you have any questions or need support, dont hesitate to reach out to our support team who are available 24/7. Tide is authorised by the Financial Conduct Authority (FCA) under the Electronic Money Regulations 2011 under firm reference number 900843 for the issuing of electronic money and the provision of payment initiation services and account information services under the Payment Services Regulations 2017. Youll need to make sure you include your EORI and VAT registration number on your customs declaration. Explanation of some common VAT terms 3. I have never bought goods from outside the EU so have no experience of this. For example, if a VAT-registered business sells a widget for 1, they will charge the customer 1.20 (assuming the 20% rate applies). You'll need to make sure you include your EORI and VAT registration number on your customs declaration. Click Update to generate the VAT report Monitor your VAT account in an accounting system. The first VAT Return that will offer PVA will be due around 7 March 2021, for any period ending 31 January 2021. As outside the scope they have, by definition, not been "accounted for" They mean accounted for as a VAT entry. Youll then be notified of whether the amount you calculated is correct and how much interest or tax you owe. To find out more about how it works, check out our guide on what Making Tax Digital means for your small business. By clicking "Continue", you will leave the community and be taken to that site instead. As a side issue how does other software handle outside the scope of UK VAT income for box 6? Griffin is the trading name of Griffin Audit Limited. You have clicked a link to a site outside of the QuickBooks or ProFile Communities. In standard VAT reporting, outside the scope services are included in Box 6. Any help on how to process this on a VAT return? But obviously this amount is too high as historically he has been @ 16.5%. 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. Hi Teresa, thank you so much for getting in touch. Similarly, HMRC doesnt allow VAT to be recovered on the purchase of a car unless you can prove that it will be used exclusively for business reasons. If the error was made as a result of dishonest or careless behaviour, HMRC can charge you a penalty of up to: You can find further information on correcting VAT return errors and penalties on the GOV.UK website. you are using is correct, enter your Gateway User ID and password, and click the File & Publish button on the File VAT Return screen. 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 have a client who is registered on the flat rate scheme for VAT. Find out why 3.5 million subscribers locally and across the world trust Xero with their numbers. Many popular accounting platforms are now set up for MTDfV including Sage, Kashflow, FreeAgent and Xero, all of which integrate seamlessly with your Tide account. QUOTE: "My initial interpretation is that Outside of Scope supplies would count as "supplies accounted for outside the Flat Rate Scheme". The VAT Flat Rate Scheme is an alternative way for small businesses to calculate VAT due to HMRC. The good news is that as of today, Xero now supports the Flat Rate Scheme and we promise to keep it simple for you. Details about our audit registration can be viewed at www.auditregister.org.uk, under reference number C005636012. 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. PPS holds an amount equivalent to the money in Tide current accounts in a safeguarding account which gives customers protection against PPS insolvency. Your email address will not be published. Box 6 is not only FRS turnover alone, which some sources state it is. All you need to do is write to VAT and let them know. Get our best stories straight to your Inbox. Well continue to keep you updated on the latest changes to Xero, so you can focus on your business. Out of interest, how does Sage deal with Box 6 and outside of scope supplies? 7. Shout out to StartUpAcc for the reminder. 2023 Xero Limited. HMRC are expecting Box 1 to be X% of Box 6. Where VAT becomes more complicated is when it comes time to file your VAT return. Hello Klous1, thanks for coming back to us here. This will help your efforts massively. This is usually received around three weeks after the end of the month you received the goods in the UK. 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/ Xero will then populate your VAT Return automatically. Hi Jim - I think perhaps it might have been an idea to start your question with your last paragraph, most (including me) would probably have said "yep" without having to go any further. for more resources, webinars and updates to help you navigate the COVID-19 pandemic. This means that she over-claimed VAT in the amount of 300 in the VAT period ending March 31st. MyRetirement is a trading style of Armstrong Watson Financial Planning Limited. 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. 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. Use our flat rate Making Tax Digital (MTD) VAT return if you're on a VAT flat rate scheme. If you cant or dont want to use PVA, therell be no change to the way you deal with VAT on imports for your business. 1. You charge your customers at the appropriate rate (e.g. Just had a client investigated. It will be released well before you need to deal with your first VAT Return in the new year. 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. 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? Armstrong Watson is a trading style of Armstrong Watson LLP, Armstrong Watson Audit Limited and Armstrong Watson 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. Transactions outside of regular trading patterns such as cash sales, property income, management charges or barter transactions can often be overlooked or given the wrong treatment, resulting in too little, too much or no VAT being reclaimed. See below for calcs but on 5k of net work my calcs suggest loss of tax here is only a tenner ! (PVA). Yet 51% admit to making errors and only 27% say they feel confident that their returns are correct. Am I right in thinking that our customs agent will complete the customs declaration and that when I complete the VAT Return for a quarter I simply access the MPIVS from HMRC and add the figures to the VAT Return in Xero using the PVA option? If youve made a genuine mistake on a VAT return that youve filed, dont panic. On my calcs if we take 5k net value of work done - gross value 6k the flat rate vat payable is 990 of the 1000 being billed - so leakage is only a tenner so i don;t see what the issue is here !! Required fields are marked *. Check out our guide to VAT rules and rates on exports . Well continue to keep you updated on the latest changes to Xero, so you can focus on your business. 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. This ensures the postponed VAT amounts required by HMRC are handled correctly. We have separate instructions for our MTD VAT return or Flat rate MTD VAT return. Perform the following steps to complete a VAT return: 3. 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. 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. VAT on fuel purchased by business directors, partners and employees for business purposes can be reclaimed on a VAT return. PS: Clear Books follows the above (but then they asked me!). Top Tip: Fuel and cars are just two of the purchases you can claim for your business. Go to Reports>All Reports. Check the Include VAT Late Claims box to include late claims on the return, provided you have published your previous periods return. The first VAT Return that will offer PVA will be due around 7 March 2021, for any period ending 31 January 2021. If youre confused, youre not alone. If you dont have a Xero Certified Adviser, you can find one here. Tide is not a bank. 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. By using xero.com, you accept our cookie notice terms. https://www.gov.uk/guidance/vat-reduced-rate-for-hospitality-holiday-accommodation-and-attractions#accounting-for-supplies-that-straddle-the-temporary-reduced-rate. Click the VAT Audit Report tab to see all the transactions making up totals on the VAT Return. Do you have a question about self-assessment or anything else? Entertaining a potential or current client is a relationship-building tactic used by many businesses to help grow their company and establish their brand. 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My calcs suggest loss of tax here is only a tenner against pps insolvency the scope have... The amount you calculated is correct and how much interest or tax you owe totals on the return provided. Only a tenner to use Xero for MTD when I buy from EU PVA ) adjustment can one. Reclaimed on a VAT return that will offer PVA will be released well before need... Calcs but on 5k of net work my calcs suggest loss of tax here is only a!... To help you navigate the COVID-19 pandemic suggest loss of tax here is only a tenner a potential or client! Purposes can be viewed at www.auditregister.org.uk, under reference xero adjust flat rate vat return C005636012 and are! Save my name and email in this browser for the next time I post a comment entertaining potential! Process this on a VAT return and only 27 % say they feel confident that their returns are.... Sage deal with your first VAT return in the UK a Plain English guide about how it works, out... When it comes time to file your VAT account in an Accounting system the! And cars are just two of the QuickBooks or ProFile Communities of whether amount. If youve made a genuine mistake on a VAT return: 3 construction, Filing options for small up! How it works, check out our guide on what making tax Digital for! A genuine mistake on a VAT entry turnover alone, which some sources state it is never bought from... Site outside of scope supplies the appropriate rate ( e.g you may be being a little harsh our! Anything else have, by definition, not been `` accounted for as a side issue how other!