I have just filed my final VAT return under the Flat Rate Scheme and then left the scheme at the end of that VAT period.
Under normal FRS accounting in QuickFile, I understand that, when the return is filed, QuickFile should:
Debit the Sales Tax Control account by the invoice output VAT.
Credit the VAT Liability account by the actual Flat Rate VAT due to HMRC.
Credit nominal code 4999, “Flat Rate VAT Sales Adjustment”, for the difference.
In my case, the Sales Tax Control account has been cleared for the full invoice VAT, and the VAT return has been filed. However, I cannot see the corresponding final-period entry in nominal code 4999, or elsewhere in the nominal ledger.
For illustration only: if invoice VAT was £1,200 and FRS VAT payable was £1,000, I would expect an adjustment of £200 credited to account 4999.
Is this adjustment:
Posted only when the VAT payment is recorded,
Posted automatically when the return is filed, or
A manual journal required when leaving the Flat Rate Scheme?
If it is automatic, where can I view the generated journal and what nominal accounts should it affect?
I am migrating to new bookkeeping software from the following day, so I need to establish the correct closing balances without disclosing my actual figures.
The adjustment is a line in the journal that QuickFile creates behind the scenes when you submit the VAT return - on your journals screen there should be a “VAT journal” dated on the last day of the relevant quarter.
If the VAT journal doesn’t include the 4999 line then are you sure your final return has actually been calculated as flat rate? If you turned off the flat rate setting in QuickFile before submitting (what should have been) your last FR return, then that return would have been treated by QuickFile as a standard return rather than a Flat Rate one.
True, you need to disable the FR setting in order to be able to record VAT on your purchases post-switch, but you’d need to turn it back on before submitting the final return.
If this is what has happened then I guess you will have to contact the HMRC VAT helpline and ask them what they want you to do - it’s not possible to amend a return through QuickFile (or any other VAT MTD software), someone at HMRC would have to manually cancel the wrong return before the software would let you resubmit it, or they might just tell you to work out the differences and adjust your next return to compensate. Only they can decide.
Thanks ian_roberts. I have checked the QuickFile submission summary. It confirms that the return was calculated and submitted using Accrual Accounting (Flat Rate @ 14%), rather than standard VAT accounting.
So I don’t think the return itself was submitted under the wrong VAT scheme.
My issue is that, although the return was submitted as Flat Rate, I cannot find the corresponding final-period posting in the “Flat Rate VAT Sales Adjustment” nominal account. Previous FRS returns generated one automatically.
My theory is that switching the Flat Rate setting off immediately after submitting a final FRS return can prevent or remove the normal accounting adjustment journal, despite the return itself having been correctly calculated as Flat Rate.
Is the calculation shown in the “export” of that VAT return? Does the adjustment exist in the corresponding VAT journal? Are you definitely looking at the right date range on the chart of accounts/P&L/wherever it is that you expect to see the 4999 entry? Have you since run a year end at the same date as the VAT return (which would have netted off all the P&L codes including 4999 to zero for the year)?
The VAT journal is created at the moment you press the submit button, it won’t be affected by anything else you did after that point.
Thank you. I found the VAT journal. It contains the expected split: a credit to VAT liability for the FRS amount, a credit to 4999 for the Flat Rate adjustment, and corresponding debits to Sales Tax Control. So the return was correctly submitted and accounted for. My earlier nominal-ledger export simply did not show the final adjustment.
I know that the CSV files you get from an account backup are anything up to a few hours behind real-time (i.e. if you do an account backup immediately after creating a new journal then it won’t include the effects of that journal), maybe something similar is happening with whatever kind of export you did.