Ammending old Purchase Orders after VAT submitted

When I started I hadn’t entered VAT rate for suppliers. I now need to amend old POs to enter VAT; but POs are “locked as it relates to previous submitted VAT return period”.
I am on flat rate scheme so amendments won’t affect VAT owed. How can I enter the VAT on these older P{Os ???

Hi @davidhartley

Have you always been on the flat rate scheme? Are you on cash or accrual accounting for VAT?

The only real way to amend a locked document (such as a purchase invoice, sales invoice, etc.), is to roll back a VAT return to release the lock. However, if you’ve always been on the FRS, then you shouldn’t be recording the VAT amount on purchases unless it’s a capital cost (which is claimable under the FRS). Anything else should just be recorded with the gross figure and no VAT.

My accountant does not agree with that. He claims, for the end of year accounts, I should record sales and purchases Nett of VAT. Even though on FRS.

Hi @davidhartley

If you’re not claiming back VAT on a purchase, it would be recorded as the gross figure without the VAT. The situation would be similar to if you’re not VAT registered. There are more details on the reasoning, here: How do I record VAT on my purchases if I’m not VAT registered?

You are right in that for VATrecords I do not need to keep records of the VAT on purchases. BUT for submission of annual accounts for corp tax purposes a Ltd company must submit profit and loss nett of VAT. So I must keep VAT records on all purchases.

Hi @davidhartley

HMRC VAT Notice 733 suggests that the expenses are recorded as gross (including the VAT):

7.8 How do I prepare business accounts for Income Tax purposes while I am using the Flat Rate Scheme?
It is expected that accounts for businesses who are using the scheme will be prepared using gross receipts, less the flat rate VAT percentage, for turnover and that expenses will include the irrecoverable input VAT.

There’s also an internal manual for HMRC which suggests the same thing.

I hope this helps.

If you are on the FRS then your accounts should include purchases including vat. They are net if you are on a normal vat accounting scheme.

Think of it any other way, you have paid a % of your gross sales to hmrc vat under frs but you haven’t claimed the vat back on purchases. So therefore the full amount is claimable against corporation tax. Unless of course you like paying an extra 19% in tax. Your choice.

Either your accountant doesn’t understand your on a frs or you have misunderstood him. Either way vat is included on purchases in the accounts on a frs.

You don’t need to record the vat element in quickfile, but what you should be doing is showing the gross amount for purchases, which would include the vat amount.

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