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Rolling Back VAT - Question?


#1

Hi,

It’s possible that I may need to recalculate VAT for the last 3/4 returns. I’m currently in comms with HMRC about the recalculations. I recently applied to switch from the flat rate VAT scheme to the standard rate as I’m expecting to increase my turnover above the threshold limit (£230k). They’ve told me they removed me from it back in Dec 2017, as I went over the threshold back then. I didn’t receive any notification from them regarding this and as my calculations showed me staying just under I didn’t apply to switch back then.

The issue appears to be around reverse charge transactions (namely Amazon fees). HMRC guidance says to include these in the turnover box but to reverse charge them using Boxes 1 and 4 which I did as well as Box 7 which is in their guidance. So basically including the reverse charge in the turnover puts me going over but not including them doesn’t. From my understanding of their various guidances etc the threshold only applies to sales turnover. I don’t have a specific answer from them yet about what they want me to do. I suspect I’m going to end up having to recalculate on the standard rate to cover the time period and pay them any extra.

Anyway… until I get an answer I’m trying to figure out the best and quickest way to do this if I have to and would like to know if the following would work:

  • Rollback the relevant VAT returns in Quickfile in date order going backwards
  • Change the VAT Settings to Standard VAT from the relevant date (understand it will need to be from start of VAT accounting period)
  • Edit the relevant VATable purchase invoices to include 20% VAT

This should then enable me to redo the VAT returns in Quickfile to get the standard rate figures to then provide HMRC and sort out with them any extra VAT I have to pay etc. Would this work?

Note: The original returns were not sent online by Quickfile, they were input through the HMRC website.


#2

Hi @Katie_B

In regards to QuickFile, yes this should work. When the return is rolled back, it’s as if it was never created (although we do keep it on record for reference). Changing the VAT rate and re-running the return would use the current figures. If you’ve disabled flat rate for example, then it would be calculated using the normal accrual/cash accounting method.


#3

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