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Ta all. Any help on how to process this on a VAT return? Xero displays filed returns under the Filed with HMRC tab and shows the return as Pending. you are using is correct, enter your Gateway User ID and password, and click the File & Publish button on the File VAT Return screen. We should all now know that Outside of Scope applies are not included in FRS turnover. 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. Also include any amount you have entered in box 8. 5. To contact us, simply click the Help icon at the upper right hand corner of the screen while youre logged into Xero. Were very pleased, too. If not, delegate the role to someone with sufficient knowledge and expertise to keep you VAT compliant. PS: Clear Books follows the above (but then they asked me!). Box 6 is not only FRS turnover alone, which some sources state it is. Posting the PVA amounts to the VAT return using our new feature will update Box 1 and Box 4 on the VAT return. HMRC are expecting Box 1 to be X% of Box 6. Click the File VAT Now button at the bottom of your VAT Return. We just need to be able to enter the correct PVA VAT for each transaction/quarter without a messy workaround. All content 2020 Armstrong Watson. Some of Tides members also hold e-money accounts provided by Prepay Solutions (PPS) (account sort code is 23-69-72). Hi Astra, thanks so much for getting in touch. The Box 1 would then show 5,000. We are using QB Desktop as per the tag. Featured Apps - Managing Staff Expenses: Why choose an expense App. 4. Do I need to charge VAT to client for Freelancer? 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 . You can then file your return as you would normally. However, this isnt always the case. The links you have provided are all for QB Online. I have never bought goods from outside the EU so have no experience of this. 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 :) Use our flat rate Making Tax Digital (MTD) VAT return if you're on a VAT flat rate scheme. Armstrong Watson LLP 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/ You can also check out our support article for more information about creating and accessing your cases. I can send some feedback through the software. Were updating Xero with the necessary changes, to help your business or practice adapt. However, It appears that may not be the correct thing to do. Find out what else you may be entitled to in our guide to reimbursable expenses and how you can claim them . The Flat Rate VAT return in Xero doesn't support Domestic Reverse Charge (DRC), so transactions need to be manually added using the reverse charge provision. DRC has been around for a while now so you should really have looked at this before, can not see any benefit from being on the FRS. Be the first to hear about our webinars, new features and business tips to help you save time and money. 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 ). Well continue to keep you updated on the latest changes to Xero, so you can focus on your business. Required fields are marked *. There is a code you need to create in the system, this article will help youhere with that, however just to let you know there will be no adjustment button made in the system for it though. His employer are now not paying the VAT on his invoices and paying them directly to HMRC. Thanks to the author for sharing such a great post. You can find some information about adjusting the amounts on a VAT return here. (PVA). 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. Type in your feedback or product suggestions. 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. This is usually received around three weeks after the end of the month you received the goods in the UK. 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. Your email address will not be published. "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). Hello Klous1, thanks for coming back to us here. Both the flat rate scheme and Making Tax Digital are recent changes that have transformed VAT treatment for small businesses. I am on a flat rate scheme. The flat rate percentage is applied when you calculate your VAT Return. 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. The good news is that as of today, Xero now supports the Flat Rate Scheme and we promise to keep it simple for you. 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. It may no longer be for him. They are on hand to answer any questions you may have about opening a Tide account or any of our products, 9am - 6pm daily. 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. You cam leave the FRS whenever you want. 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 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. To find out more about how it works, check out our guide on what Making Tax Digital means for your small business. 1. Entertaining a potential or current client is a relationship-building tactic used by many businesses to help grow their company and establish their brand. Financial Education & Wellbeing Programme, Xero User News - End of HMRCs MTD soft landing period. I would go along with that. Make sure to highlight every new or unusual transaction so that you can be sure that its given the correct treatment. Thanks! 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. You can unsubscribe anytime using the link in the footer of any of our emails.See our privacy policy. VAT, or value-added tax, is relatively straightforward in theory. 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. By using xero.com, you accept our cookie notice terms. Registered to carry on audit work in the UK by the Institute of Chartered Accountants in England and Wales. Check the Include VAT Late Claims box to include late claims on the return, provided you have published your previous periods return. Top Tip: Making Tax Digital is designed to reduce the risk of human error in VAT and tax returns. Small businesses name Xero the most-loved accounting software for the second year in a row. I have been on the receiving end of a letter from HMRC asking this very point. If your status is Failed, click on the VAT Return link to read the error message, or read the notification in your Xero inbox. Apologies if any of above is wrong peeps. Supplies that the reverse charge applies to are excluded from the Flat Rate Scheme. Your email address will not be published. The Purchases Record all your purchases as No VAT. His employer are now not paying the VAT on his invoices and paying them directly to HMRC. All rights reserved. Ready to get started with QuickBooks Online? Hi Alan, thanks for your comment. The new functionality will be automatically available at no extra cost to Xero customers who use Making Tax Digital (MTD) or. Overview 2. Understanding the 9 most common VAT return mistakes that small businesses make, as well as how to avoid them, will put you in a much better position to avoid making them yourself. Enter the flat rate percentage which applies to your business. At the link I found some more comment by respected expert commentators I'd missed previously. . It will be released well before you need to deal with your first VAT Return in the new year. 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. Your email address will not be published. From 1 January 2021, controls will be placed on the movement of goods between the UK and the EU. This walkthrough guides you To reclaim VAT on any business expense, you must provide evidence in the form of a VAT invoice. 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. https://www.gov.uk/guidance/vat-reduced-rate-for-hospitality-holiday-accommodation-and-attractions#accounting-for-supplies-that-straddle-the-temporary-reduced-rate. Obviously with regard to leaving on dates that don't qualify on both points 1 and 2 above hmrc may be ameniable to help but will probably default to saying no unless you are adept at arm twisting with regard to the vat office. 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)). It will be released well before you need to deal with your first VAT Return in the new year. ASE Professional Services is a trading style of Armstrong Watson Audit Limited and Armstrong Watson LLP. 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. 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. Keep details of the error (e.g. Charging VAT on core business supplies such as stock and office supplies is a regular occurrence. From 1 October 2021, a new reduced rate of 12.5% will apply. You can simply correct it by making adjustments on your next VAT return. Website by Simon Pighills. The scheme isn't to save VAT registered business money, but to save them the hassle of keeping proper records. Placing someone in charge of dealing with VAT day-to-day will help to avoid any confusion around tax and ensure records are consistent. 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