I have keyed the flat rate of 16.5% and cash accounting but when I check the chart of accounts, the figure calculated is at 20%. I have always done my VAT return manually but with digital accounting, I now need to sort it via Quickfile.
The flat rate percentage only applies at the point of preparing your VAT return. Your invoices should still state VAT at 20% of the net, but the VAT return will calculate the VAT due as 16.5% of the gross (about 0.17% less than the full 20% of net = 162/3% of gross would have been).
I understand that but I have not done previous VAT returns via Quickfile so the year end accounts show it as 20% on the report of accounts. How do I amend this?
Have you got the Flat Rate Scheme box ticked in your VAT settings, and the correct rate set there?
You’ll have to journal something but I’m not sure exactly what. You say you’ve not done “previous returns” via QuickFile but have you been keeping your records in QuickFile for the whole year or did you start from a trial balance part way through? And how have you been recording the payments of your previous VAT liabilities over to HMRC?
I have thanks.
I think it will have to remain like that until I do the VAT returns digitally and amend the figures manually for the accountant.
Thanks for your response!
I’ve not used the Quickfile system to balance before, just printed everything off and left it to the accountant. Imagine my horror when I’ve previously manually changed all the descriptions on sales so that it would only print items containing those words, bit of a pain when I keyed certain words which were contained in descriptions of transactions not in that category, only to find that it’s the report section which categorises everything. I’m a right numpty. Could have saved myself hours and hours and hours!
If you have your sales invoices already in QuickFile then it may be as simple as running the previous VAT returns in QuickFile without submitting them online - you’ll have to turn off the MTD checkbox temporarily in your VAT settings to be able to go back and save previous returns from before you were MTD registered. Set your VAT start date back to the start of the year, and then you should be able to go through a quarter at a time generating your previous returns, hopefully they’ll match what you actually submitted to HMRC (as long as the numbers you gave your accountant were accurate) but if there are discrepancies you can manually adjust the boxes to make it match your submissions.
As I understand it, what QuickFile does with a flat rate return is generate a journal that reverses the sales tax control account entries for the sales payments you received, calculates the VAT due under the flat rate rules and posts that as a credit to the “vat liability” nominal (which will be balanced off by a debit when you actually pay HMRC), then posts the difference between the two to “flat rate sales adjustment” so it shows as extra income on your P&L. If you have had to make any manual adjustments to your returns then you would have to separately journal “manual adjustments” over to “flat rate sales adjustment” to balance things out.
As always, if you’re not sure what to enter you’re best off asking your accountant - I’m not one, and they have a much better understanding of your specific circumstances.
Thank you for taking time to explain. I’ll look at that in a bit. That’s the problem when you are using the system differently, there’s bound to be little things flag up.
I’m really sorry, I have another question . . . .
For some reason some of our purchases have produced a VAT Purchase Tax Control Account (2201) with an allocation of VAT for various purchases but because we are on Flat Rate, we shouldn’t have and claimable VAT showing
If you’re on flat rate then you should not normally be entering any VAT on your purchases - you just put the gross amount as the net and don’t record VAT separately. I believe there is a checkbox you can tick when you enter a purchase to allow reclaim of VAT for that specific purchase (as the flat rate rules allow you to reclaim purchase VAT on certain capital purchases over £2,000) but as a rule there’s no VAT column on purchases when you’re on flat rate.
I suppose it might be the case that if you entered some purchases before you enabled the flat rate setting in QuickFile then it would have allowed you to record the VAT separately by mistake?
(BTW, all these “I believe that” caveats are because I don’t work for QuickFile, I’m just an experienced user, and I don’t use flat rate or cash accounting myself so it’s not first hand knowledge)
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