Quite an unusual set of circumstances but I’ve received payment from a UK registered business in the sum of 78,456,00€ of which 20% VAT (13,076.00€) is due to HMRC. On the day of the payment this equated to £55,000 plus £11,000 VAT payable to HMRC. The GBP has since strengthened against the EUR yet Quckfile is still calculating that £11,000 is payable to HMRC although this is now greater than 20% of the value of the EUR received. Does QF factor in exchange rate fluctuations? Where does QF source its exchange rates?
The amount due to hmrc is at the exchange rate of when it was received (I’m guessing your cash accounting?)
Makes no difference what happens before or after.
Put it this way, the amount you received hasn’t changed has it?
Surely the GBP equivalent should be calculated when the transfer from EUR to GBP takes place so that the 20% (13,076.00€) equates to the GBP equivalent at the time of exchange?
If the vat has been calculated on the payment you have received, then you are working under Cash Accounting, and therefore the vat becomes due when payment has been received, it matters not when you carry out those services.
Therefore the VAT due is 20% of the amount you have received. If you subsequently invoice for services whereby the amount is greater than the sum you received, then the difference when paid, will also be calculated at 20% and will be due to HMRC, and it will be calculated, at the exchange rate on the date it was received.
If you were not using Cash Accounting, and you have invoiced your client, then the VAT would have been calculated, on the invoice date, and will use the exchange rate on the same invoice date.
So it appears me to me, that either you have incorrectly set your vat up to use Cash Accounting, or you did not take this in to consideration.
The tax point for when the VAT becomes due, is when payment is received under Cash Accounting, or when Supply has been made under normal vat rules.
If you have always used the normal rules in the past, then you need to change the VAT settings in quickfile and remove the Cash Accounting tickbox.
You can see more info here https://www.gov.uk/vat-record-keeping/time-of-supply-or-tax-point
Referring back to my opening question in this thread, where and how does QuickFile determine its exchange rate? For example, why is QuickFile today using a GBP/EUR exchange rate of 1.2003 when HMRC’s published rate for this month is 1.1668? Can QF’s exchange rate be set manually so that it corresponds to the actual rate used at the tax point?
QuickFile uses the daily rate according to xe.com.
You can manually adjust the exchange rate on invoices. When you link a payment to an invoice, depending on what you enter, the exchange rate is automatically calculated based on the difference.
For example, if the invoice is $135 and you log a payment of £100 against it, it would assume a 1.35 rate.
Hope that helps!
Yes this helps! Thank you Mathew.
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