Currency exchange rate on flat rate vat cash accounting

Accounting
1

Hi Quickfile Team,
Please could you advise:

  1. How does quickfile account for vat on foreign currency invoices if flat rate cash accounting is used?
  2. Do you use the exchange rate at the moment of supply or payment?(i assume it should be payment due to cash accounting impact. might be terribly wrong)
  3. Is there any impact when we log a £ payment against a foreign currency ( the bank exchange rate is always poorer than market)
  4. In the VAT return calculations, which exchange rate is used: the market or the payment logged against the invoice?

Thanks
al

2

Hi @alid

As everything in QuickFile is recorded as GBP at a base level (all reporting including your chart of accounts), we capture an exchange rate at 2 points relating to an invoice - date of invoice, date of payment, providing they are converted.

We log an exchange rate captured from xe.com each day which allows us to check historical values too. So you can enter an invoice today dated 6 months ago, and we’d have a record of the exchange rate at that time.

When you create an invoice, the exchange rate is captured, and when you log a payment in GBP (e.g. a EUR invoice paid with GBP), the exchange rate is captured again. With payments, it’s not always the one we have stored as we calculate it based on the enter GBP value.

If it’s paid using it’s own currency (EUR paid as EUR), then you may wish to record a currency loss/gain against the EUR bank account on your account.

There is more about this in our knowledge base article.

3

Hey thanks for this. Could you please tell me specifically the following:

In the VAT return calculations, which exchange rate is used: the market or the payment logged against the invoice?

4

It will use the rate on the payment, if you preview the payment from the invoice you will see the rate applied. You can also see the amount lodged to the VAT return in Sterling on the backing report.