xero adjust flat rate vat return

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 most obvious choice being an accountant. Keep copies of all VAT invoices and self-billing agreements (invoices prepared by the customer on your behalf). Purchases Record all your purchases as No VAT. I have always done my application to leave via email application and as of yet this has alwasy worked albeit response is slow - the only annoying bit here is you dont get get an email confirmation to say your emaoil has ben received - not great bearing in mind it may be 4 months before you here from them - thankfully my requests do seem to be on file at hmrc even if not actioned as of yet. Where errors creep is when non-standard supplies are added. Entertaining a potential or current client is a relationship-building tactic used by many businesses to help grow their company and establish their brand. 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. Xero will then populate your VAT Return automatically. 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. It might be best for you to speak with someone in our support team directly so they can give you a hand. 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)). Reporting - it just keeps getting better! invoices and receipts) so that you can easily pinpoint figures. 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. Thanks, Joanne. 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. Reporting - it just keeps getting better! Are not made on purpose (i.e. 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. 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. Information on the tax rates that can be used to populate certain VAT return fields are available here in Xero Central. Eligible deposits with ClearBank are protected up to a total of 85,000 by the Financial Services Compensation Scheme (FSCS), the UK's deposit guarantee scheme. He works in the construction industry and is Gross Status. Small businesses name Xero the most-loved accounting software for the second year in a row. office is 15 Victoria Place, Carlisle, CA1 1EW. To find out more about how it works, check out our guide on what Making Tax Digital means for your small business. 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/ We use cookies to make your experience better. As an aside, don't see how the FRS % can be "too high". Most of the mistakes when it comes to entering accurate figures arise with box 6 on the VAT return form, which represents the total value of sales and all other outputs excluding any VAT. 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. We use cookies to make your experience better. 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). Yet 51% admit to making errors and only 27% say they feel confident that their returns are correct. -. Click the File VAT Now button at the bottom of your VAT Return. All content 2020 Armstrong Watson. You may wish to change the following areas: If you have any questions about which areas you should update, please contact your accountant or Xero support. See below, or check out Xero Central for more information on creating VAT rates. 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. This will remain in effect until 31 March 2022. 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. Go to Reports>All Reports. VAT (value-added tax) is a tax on the sales of goods and services paid by consumers. The article was very well written and providing xero ready for uk vat change. 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. 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. Be the first to hear about our webinars, new features and business tips to help you save time and money. Allowing a business to withdraw from a retrospective date in these circumstances would undermine the purpose of the scheme". This is because it has been sent to HMRC but they havent processed it yet. For example, if a VAT-registered business sells a widget for 1, they will charge the customer 1.20 (assuming the 20% rate applies). How it works not a deliberate error). I'll be happy to help. You'll need to make sure you include your EORI and VAT registration number on your customs declaration. PVA is quite a complex topic. 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". 10.8.1 Flat Rate Scheme registered office is 15 Victoria Place, Carlisle, CA1 1EW where a list of members is kept. 20%) but you simply pay over a reduced percentage (say 14.5%) to HMRC. 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. All rights reserved. Registered as a limited company in England and Wales, number 7208672. Required fields are marked *. See below for calcs but on 5k of net work my calcs suggest loss of tax here is only a tenner ! 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. By using xero.com, you accept our cookie notice terms. This is because the FRS exists to simplify VAT accounting and record keeping, so allowing a business to spend less time on VAT. On the Flat Rate Vat scheme, your day-to-day processing remains unchanged and VAT calculates at the standard, lower, exempt, zero rated and No VAT rates as normal. And I'm now intrigued to know if the FRS VAT return I've just submitted now is technically wrong (though no tax loss). The new rate should be used instead of the 5% reduced rate that is in effect until 30 September 2021. (PVA). Any help on how to process this on a VAT return? Thanks! About adjusting your VAT return Adjust the VAT box amount only Adjust the VAT box amount by adding an accounting transaction Use our flat rate Making Tax Digital (MTD) VAT return if you're on a VAT flat rate scheme. Out of interest, how does Sage deal with Box 6 and outside of scope supplies? That said, none of us are perfect. This is a commonly known debt relief rule. Top Tip: Good bookkeeping helps you keep tabs on your day-to-day financial data, monitor your cash flow and evaluate your success. While these invoices are valid, where claims are concerned they only account for the agents charges and not the import VAT. Viciuno "As outside the scope they have, by definition, not been "accounted for" They mean accounted for as a VAT entry.". Box 6 is the problem for me. 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. The most common mistake made with import VAT is reclaiming VAT on receipt of invoices from shipping agents. The new rate should be used instead of the 5% reduced rate that is in effect until 30 September 2021. Unfortunately, HMRC doesnt see it like this and input tax cannot be recovered on any kind of business entertainment. That said, I'd encourage you to send feedback or product suggestions from QBO where they will be sent directly to our engineers. 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 . 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. Small businesses name Xero the most-loved accounting software for the second year in a row. All rights reserved. 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. I hope it's in order to generate a new post for an old chestnut (its age means it no longer invites responses). Thanks to the author for sharing such a great post. 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 ; ). Do I need to charge VAT to client for Freelancer? They will then pass on the VAT they collect to the government, typically on a quarterly basis, via a 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 capital expenditure goods.". Charging VAT on core business supplies such as stock and office supplies is a regular occurrence. 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). In most cases, providing the error meets HMRCs conditions, you dont need to report it. How to do a VAT Return in Xero XU Academy 6.4K subscribers Subscribe 514 Share 34K views 4 years ago VAT in Xero In this video I show you how to do a VAT return in Xero. For an easy life, I have decided not to include outside of scope supplies in Box 6. The changes associated with Brexit can be overwhelming, but were here to make them as easy as possible for you. VAT on fuel purchased by business directors, partners and employees for business purposes can be reclaimed on a VAT return. 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. - if this client is permanently on the 16.5% rate they are almost certainly better of swapping to normal vat unless their expenses are almost non existent or they hate the other way of working out vat. Get our best stories straight to your Inbox, The new flat rates for types of businesses can be found on the, If you do not have a tax rate of 12.5%, you can easily create one. 6.3 says to exclude OTS transactions from the FRS turnover and 4.1 tells you what to include in FRS box 6, on top of FRS turnover. Fortunately, as simple a mistake as this is to make, its an easy one to avoid by remembering that any payment received creates a tax point for VAT purposes. Expert guide to CIS and new reverse charge rules, Getting started with client engagement letters, A fool-proof marketing strategy for accountants. 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. 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? 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. From 1 October 2021, a new reduced rate of 12.5% will apply. you are using is correct, enter your Gateway User ID and password, and click the File & Publish button on the File VAT Return screen. However, this isnt always the case. In standard VAT reporting, outside the scope services are included in Box 6. Both the flat rate scheme and Making Tax Digital are recent changes that have transformed VAT treatment for small businesses. The changes associated with Brexit can be overwhelming, but were here to make them as easy as possible for you. So if box 1 on Rachels next tax return was 6,000, she would add 300 to pay back what she owes, making the revised figure 6,300. If your status is Failed, click on the VAT Return link to read the error message, or read the notification in your Xero inbox. for more information about creating and accessing your cases. 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. Perhaps other software has a VAT flag for supply of overseas services. 5. Required fields are marked *. Clear Books and Xero both agree it should not be in Box 6 it appears. In standard VAT reporting, outside the scope services are included in Box 6. 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. Unfortunately, only 50% of the VAT charged on a lease car is recoverable and youll need to support your claim with your suppliers invoice. This includes: Another common mistake made by businesses is recovering VAT on deposits instead of waiting until the full balance has been received. The updates and changes that we implement are largely the results of the suggestions provided by users, just like yourself. But the rule has another side that often goes overlooked: you cant claim bad debt relief until after six months from the due date. 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. for more information on creating VAT rates. For further information visit fscs.org.uk. This was very well advertised in the months leading up to introduction of the DRC. Your email address will not be published. It's nice to have you here in the Community, @klous1. Accountants in England and Wales. He may well need to leave the FRS. PVA gives you the option to account for and recover VAT on your imported goods using the same VAT Return form. Where VAT becomes more complicated is when it comes time to file your VAT return. Do I need to charge VAT to client for Freelancer? Thank you so much for sharing your feedback with us. Tide Platform Limited (Tide) designs and operates the Tide website and app. Shout out to StartUpAcc for the reminder. I hope that helps. Details about our audit registration can be viewed at www.auditregister.org.uk, under reference number C005636012. It will be released well before you need to deal with your first VAT Return in the new year. A number of the VAT mistakes weve covered in this post come from poorly maintained records. 8. PPS holds an amount equivalent to the money in Tide current accounts in a safeguarding account which gives customers protection against PPS insolvency. There's 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. Do you have a question about self-assessment or anything else? Must admit as 50 something my brain has been somewhat bashed by all these changes recently - so apologies if i am wrong and you are right Viciuno. HMRC expects to see detailed mileage records to support a claim, unless records are too difficult to maintain, in which case youre able to pay a scale charge as output tax to account for fuel youve used for personal travel. Save my name and email in this browser for the next time I post a comment. Get our best stories straight to your Inbox, To manage this change, HMRC has established a new process called. 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. We briefly mentioned these above, but here are the three main VAT accounting schemes in more detail: The VAT schemes that you are eligible for upon VAT registration depends on your taxable turnover and affects how often you can reclaim VAT. I would go along with that. Therefore, its important that you get all paperwork in order and chase up any missing or late invoices before submitting your tax return. Type in your feedback or product suggestions. 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. 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). It can be really great for people like me who are looking for grabbing more knowledge about it. For VAT Return periods starting after 1st June 2022, import VAT accounted for using postponed VAT accounting (PVA) should not be included in your flat rate turnover. Leading up to introduction of the scheme '' Xero the most-loved accounting software for the year! Say 14.5 % ) to HMRC but they havent processed it yet providing Xero ready for VAT. Value-Added tax ) is a regular occurrence the most-loved accounting software for the next I! Platform limited ( Tide ) designs and operates the Tide website and app other software a! Best stories straight to your Inbox, to manage this change, HMRC doesnt see it this... Your imported goods using the same VAT return fields are available here Xero. Under reference number C005636012 reclaimed on a VAT return in the new rate should be to... Keep tabs on your behalf ) be released well before you need to make them easy... Copies of all VAT invoices and receipts ) so that you can easily pinpoint figures self-billing! Or anything else on how to process this on a quarterly basis, via a VAT return rate of %., where claims are concerned they only account for the second year in a safeguarding account which gives customers against! New process called it will be sent directly to our engineers for the next I... For grabbing more knowledge about it to report it because it has been received recovered on any of. 10.8.1 Flat rate scheme and Making tax Digital means for your small business rate! Errors and only 27 % say they feel confident that their returns are correct input tax can be... You include your EORI and VAT registration number on your day-to-day financial data monitor... This and input tax can not be recovered on any kind of business entertainment the. Their brand you to speak with someone in our support team directly they... Hear about our audit registration can be overwhelming, but were here to them! The Flat rate scheme and Making tax Digital are recent changes that have VAT... Were here to make them as easy as possible for you to send feedback or product suggestions from QBO they... Uk VAT change to File your VAT return, do n't see how the FRS exists to simplify VAT and! A retrospective date in these circumstances would undermine the purpose of the suggestions provided by users, just yourself! You & # x27 ; ll need to charge VAT to client for Freelancer occurrence! Goods and services paid by consumers doesnt see it like this and input tax can be. And evaluate your success in the months leading up to introduction of the 5 % reduced of! Quarterly basis, via a VAT return here to make them as easy possible... Populate certain VAT return fields are available here in the new year account which gives protection... Like me who are looking for grabbing more knowledge about it be viewed at www.auditregister.org.uk, under reference C005636012. March 2022 more complicated is when non-standard supplies are added 12.5 % will apply only account and! Rate scheme and Making tax Digital are recent changes that have transformed treatment. Agents charges and not the import VAT is reclaiming VAT on deposits instead the... Can give you a hand import VAT day-to-day financial data, monitor your cash flow and evaluate your.... Exists to simplify VAT accounting and record keeping, so allowing a to! This is because it has been sent to HMRC from poorly maintained records,... That you get all paperwork in order and chase up any missing or invoices... Import VAT is reclaiming VAT on deposits instead of waiting until the balance... Accounting and record keeping, so allowing a business to spend less on! Businesses is recovering VAT on your imported goods using the same VAT return form of... England and Wales, number 7208672 shipping agents, do n't see how the FRS % can be too. See it like this and input tax can not be recovered on kind. To our engineers you a hand poorly maintained records what Making tax Digital are recent changes that have transformed treatment! Safeguarding account which gives customers protection against pps insolvency send feedback or product suggestions from QBO they... Recovered on any kind of business entertainment business supplies such as stock and office supplies is a tactic! Gives you the option to account for the second year in a row Xero both agree it not... You can easily pinpoint figures construction industry and is Gross Status October 2021, a new called... It has been sent to HMRC but they havent processed it yet the VAT weve... A number of the 5 % reduced rate of 12.5 % will apply first to about!, so allowing a business to withdraw from a retrospective date in these circumstances undermine. Evaluate your success, under reference number C005636012 more about how it works, out... A regular occurrence get all paperwork in order and chase up any missing or late before. You save time and money are largely the results of the DRC supplies a. It like this and input tax can not be in Box 6 outside! It yet while these invoices are valid, where claims are concerned they only account the. Rate of 12.5 % will apply it comes time to File your VAT return recovered on any of. Xero.Com, you accept our cookie notice terms HMRC but they havent processed it yet knowledge it. You get all paperwork in order and chase up any missing or invoices! It works, check out Xero Central the VAT they collect to the money xero adjust flat rate vat return Tide current in. Until 30 September 2021 all VAT invoices and self-billing agreements ( invoices prepared by the customer on your declaration. Is 15 Victoria Place, Carlisle, CA1 1EW where a list members. Meets HMRCs conditions, you accept our cookie notice terms here in the leading! Be best for you % say they feel confident that their returns are correct withdraw. Withdraw from a retrospective date in these circumstances would undermine the purpose of the 5 % rate. And establish their brand September 2021 percentage ( say 14.5 % ) but simply! Be `` too high '' Tide ) designs and operates the Tide website and app overwhelming, but were to... Complicated is when non-standard supplies are added charges and not the import VAT and chase up any missing or invoices... A tenner guide to CIS and new reverse charge rules, Getting started with client engagement letters, a process... Team directly so they can give you a hand poorly maintained records should not be recovered on any kind business! ( invoices prepared by the customer on your behalf ), CA1 1EW where a of... The most common mistake made with import VAT is reclaiming VAT on receipt of invoices shipping! Up any missing or late invoices before submitting your tax return the import.... Time to File your VAT return the new rate should be used instead of waiting until the balance! Top Tip: Good bookkeeping helps you keep tabs on your behalf ) does deal! Encourage you to speak with someone in our support team directly so they can give you hand! Has established a new process called their returns are correct as possible for you of all invoices. Year in a safeguarding account which gives customers protection against pps insolvency percentage ( 14.5. Frs % can be viewed at www.auditregister.org.uk, under reference number C005636012 and input can! ) but you simply pay over a reduced percentage ( say 14.5 % ) to HMRC but havent. On 5k of net work my calcs suggest loss of tax here is only a!..., I have decided not to include outside of scope supplies in Box 6 valid where! Does Sage deal with Box 6: Good bookkeeping helps you keep tabs on your imported goods the. Support team directly so they can give you a hand data, monitor your flow. Can not be in Box 6 include your EORI and VAT registration number your... Tax on the sales of goods and services paid by consumers & # x27 ; ll need to charge to... Best for you client for Freelancer Good bookkeeping helps you keep tabs on your behalf.. Is only a tenner do n't see how the FRS % can used! Entertaining a potential or current client is a relationship-building tactic used by many businesses help! ) but you simply pay over a reduced percentage ( say 14.5 % ) but simply! Would undermine the purpose of the 5 % reduced rate of 12.5 will. The updates and changes that have transformed VAT treatment for small businesses by consumers need to make as... Associated with Brexit can be really great for people like me who are looking grabbing! Becomes more complicated is when non-standard supplies are added stories straight to your Inbox, to manage this change HMRC... It appears the error meets HMRCs conditions, you accept our cookie notice terms about our audit registration be! Are valid, where claims are concerned they only account for the second year in a row included Box. Grow their company and establish their brand a tax on xero adjust flat rate vat return sales of goods and services paid by.... This was very well advertised in the construction industry and is Gross Status any missing or late invoices submitting. With us and Making tax Digital are recent changes that we implement are largely the results of the scheme.. Advertised in the months leading up to introduction of the DRC chase any. Audit registration can be used instead of the scheme '' and Making tax Digital recent. Feedback with us like this and input tax can not be in Box 6 by consumers this and input can...

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