Using 2 rates for 1 VAT period with flat rate scheme

Accounting
1

Hi,
Is there any way of getting Quickfile to calculate two rates of VAT for return ?

I.E pre 15th July of 20% (11.5 % flat rate for me) and 5% post 15th reduction. I can of course calculate manually but how will I submit this digitally in Quickfile ?

Any thoughts appreciated

2

So are you switching off the flat rate scheme altogether or has your sector’s flat rate actually gone down to 5%?

3

Hi Ian, nice to hear from you again. Where have you been :slight_smile: Government has reduced VAT to 5% until January. for hospitality. My VAT period ends July 30th and so I have to calculate 2 rates. Is there away in Quikfile to do this . I can of course do this manually but I have to report it digitally.

4

Have you checked what the reduction is for your sector under frs? As far as I’m aware you arnt going from 11.5% to 5%, but I believe there will be a reduction of some sort, to my knowledge hmrc haven’t published the reduced rates yet, so it’s abit hard to speculate what rate you should apply.

Under frs you charge 20% anyway, so you have plenty of time to work out the FRS rate before submission
If your period end is 30th July you have until 7th Sept to file your return.

5

If you fall within the given sectors, you will charge the new 5% vat, commencing from 15 July 2020, and apply the new flat rate vat on your total vat inclusive turnover, to establish what you pay.

For example, catering has gone from 12.5% to 4.5% flat rate.

The new rates are on the hmrc website. You will need to check what sector you fall under.

6

I checked with HMRC yesterday by phone and they didn’t know , so they said just apply the 5% rate . The website as of yesterday had no info , I.ll check again . Regardless of that how would this be accounted for in Quick file ?

7

Eddie B you are correct , rates are now published. Thank you. I’m still no nearer an answer on accounting for 2 rates in the same period in quickfile , anyone ?

Darren

8

Hi @Keepitsimple

Unfortunately you can’t use two rates for a VAT return in QuickFile. It would require a manual adjustment.

The rate used will be the one in your VAT settings at the time that the return is generated.

Hope this helps.

9

I thought as much. How are we to submit a digital return if our software can’t do it ? Could be as simple as two returns with different date parameters ? I.E. Before 15th and after 15th ?

10

The date range for the return are fixed by HMRC. A manual adjustment would be the way forward for this. Any notes on the return aren’t submitted to HMRC - all they see are the final figures in the return boxes.

11

Ah I see , a manual adjustment on the VAT return form in quickfile ? I’ll play around.

thanks Matthew

12

Yes, unfortunately it’s not going to be easy for flat rate users.

I would do this, though there may be other ways.

For the rest of your current vat quarter, leave the flat rate as it is, the one you are on now for your sector.

Charge the new 5% from 15th July onwards.

You’ll need to report from the beginning of your current vat period, until 14th July, then from the 15th July to the end. This will give you the 2 figures, but it’s the last you’ll need to apply your new rate to, to recalculate.

This will give you the figure to minus from your vat return by manual adjustment.

Example at 12.5% current flat rate to the new 4.5%

1st part till 14th July turnover is £5000 so £625 vat

2nd part 15th July onwards turnover is £3000 so £375 however, new rate is 4.5% so should be £135

You’ll need to lower vat return by 375 - 135 = 240

Then don’t forget to alter as of your new vat quarter, your new flat rate into quickfile.

Hope it makes sense.

1 Like
13

You need to start charging 5% VAT instead of 20% on the invoices you give to your customers, as for how you adjust the VAT return:

  • export the calculations for the return, these will be based on your pre-reduction flat rate of 11.5%
  • divide up the sales into those before and those after 15th July
  • work out the difference between your normal flat rate and your temporarily reduced one (e.g. if you’ve gone down from 11.5% to 6% then the difference is 5.5 percentage points)
  • multiply the total VAT inclusive sales from 15th July onwards by that difference (e.g. total inc VAT of £3000, 5.5% of that is £165)
  • adjust box 1 down by that number

This will have the effect of treating your post-15th sales at the lower flat rate. Now to fix your books you’ll need to create an extra journal to debit manual adjustments and credit flat rate adjustment for that same amount, which will treat the saving (from not paying as much over to HMRC) as extra turnover.

For future returns change your flat rate setting to the new rate, and you’ll have to do a similar thing in reverse when the rate goes back up.

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14

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