Hi. I’m new to QF and also new to being VAT registered. Since setting up the flat rate VAT in QF I see that my general sales are reduced and that 20% is being moved into the tax control account. I understand that this gets adjusted when a VAT return is submitted.
What I’m struggling to get my head around is that the reports are now inaccurate(to me) as the P&L his turnover less the 20 in the tax control account although I’m only liable for 6.5% so my turnover and profits are higher than shown. This also means that the tax report is also incorrect.
Is there a way to rectify this in QFor could somebody please suggest how I could see it so it makes more sense.
Thank you in advance to anyone who could help with this.
It is the case that the way QuickFile handles flat rate your P&L is only accurate at the end of a VAT quarter. Your sales are initially recorded in P&L at the net value, with the vat portion in the control account on your balance sheet. When you submit a VAT return QuickFile calculates your flat rate liability based on 6.5% of the gross (the P&L general sales plus the corresponding VAT in the control account), and moves the balancing figure to “flat rate sales adjustment” in your P&L as additional turnover. At that point the sum of general sales plus flat rate adjustment will equal 6.5% off your gross sales up to the end of that quarter as required.
It’s hard to approximate your “real” turnover mid-quarter because it depends on the actual vat rate you apply to each of your sales. If all your sales are standard rated 20% VAT then you can approximate it by multiplying your net general sales for that quarter by 1.122 - for a £100+VAT sale your actual turnover after deducting your flat rate VAT works out at 100 minus 6.5 = 93.5% of £120 = £112.20. But this doesn’t work if some of your sales are zero or reduced rate.