I am completing a flat rate VAT return and notice that box 7 includes some of my purchases but not many. Looking further into it, it looks like it included those that show VAT which makes sense except there is inconsistency as eg. some fuel receipts have VAT showing and some don’t but both sit under the same nominal code.
However, i also thought that under the flat rate scheme i just pay the % of the turnover box 6 figure)?
If this is the case, why am i seeing figures in box 7 & 4?
Hi @GaryColtman
It would be worth you checking the actual invoices for inconsistencies as the VAT return goes by the invoices rather than the nominal codes.
For the Flat Rate Scheme boxes 4&7 are usually 0 - have you checked your settings and the settings on the invoices that are showing in those boxes?
Thanks. A number of the purchases showing are for fuel. Looking at the invoices, it shows VAT, but if i click on modify the VAT is zero and the invoice balance is a minus figure by the same amount as the VAT. The only way i can change anything is through the VAT rules. If i click the out of scope box, it then disappears out of box 7.
Do i need to do this for every invoice in box 7? Thanks
Flat rate vat returns should not be including any purchase vat at all.
The only purchase vat you may include would be capital expenditure. Fuel.is not one of them.
Something is clearly wrong with your vat return.
Have you recently changed onto flat rate from regular VAT? Normally when you enter purchases after enabling flat rate in QuickFile it won’t let you enter a VAT breakdown unless you tick the box for capital purchases where you are allowed to reclaim, but if you’ve only recently flipped the flat rate switch and you had some purchases that were already entered with VAT before that point then they’ll still count in the return.
The simplest fix may be to temporarily disable the flat rate setting, then edit those purchases to remove the VAT (set the net column to the VAT inclusive total and the rate to 0%) and then turn flat rate back on.
Thanks - That’s my understanding but the invoices (created from the auto bank feeds) appear to be separating out the VAT. Looks like i have to go into each one and change the VAT to “out of scope” to remove from the return (which isn’t helpful)
You should edit the rules to make them record future purchases as zero VAT too.
Thanks Ian. I changed in June ready for this VAT return but those invoices were dated May so could be that. But then there are others with similar dates that are not showing VAT and not in box 7. I can adjust the return or the invoices that are in box 7 as a work around and change the settings. I can see i can edit the vat on the tagging rules so will set about doing that.
No, you need to remove the VAT by making the net column equal to the VAT inclusive total and the VAT rate zero. If you simply mark as out of scope but leave the VAT column as is then the VAT amount will just sit there on your balance sheet in the purchase tax control account rather than going into P&L as part of the cost to you of the fuel.
Thanks for that Ian. I think i can sort it out now!
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