When a bank payment is tagged and the option to pay it on account against a supplier is chosen, it asks for a VAT rate. Is the VAT only picked up if you are using cash accounting? I am using standard accounting and I am hoping that the VAT is ignored with these payments on account as it will eventually be allocated against a mixed rate purchase, some of the invoice zero rated and some of it vat at 20%.
HMRC mandate that prepayments (on cash accounting) must still be included on the next VAT return. For example you can’t collect £1000 from a client and hold it on account for a year and defer paying VAT until it is attributed to an invoice. QuickFile therefore asks for a rate that should apply if a VAT return is created before the payment is assigned to an invoice.
None of this matters if your on accrual accounting for VAT purposes as all VAT calculations are based on the invoices, and therefore any mixed rates would be used.
Thank you and that was what I was hoping would be the case, that it only applies to cash accounting, which I know has to be declared for VAT at point of receipt. But as I have selected standard accounting, it threw me that it was still asking for the VAT rate.Thanks again,
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