Warning: You have non-UK VAT rates…

Support
1

Hi

My business operates VAT under TOMS and has an agreed rate with HMRC of 3.59%. However each invoice I create has a warning:

Warning: You have non-UK VAT rates on this invoice but it has not been marked as Out-of-Scope

Is there anything that can be done to remove the message as it does not apply in this case.

Thank you.

Regards

Michael

2

Hello Michael

The warning you are seeing is expected behaviour. Any custom rate, such as the 3.59% TOMS rate agreed with HMRC, will trigger the “non-UK VAT rate” message.

You shouldn’t be applying the 3.59% rate on his sales invoices. Under TOMS, VAT isn’t shown on invoices to customers — it’s only calculated on the margin and reported through a manual adjustment on the VAT return.

The warning therefore doesn’t affect the VAT return and can be safely ignored, provided you raises sales invoices as Out of Scope and make the appropriate manual adjustment on the VAT return each quarter.

3

Thank you Steve.

I will have to study your reply in more detail over the weekend.

Kind regards

Michael

4

TBH my accountant handles the VAT (though I don’t have full confidence) and I am not sure they are dealing with it in this way.

However, when you write “provided you raises sales invoices as Out of Scope”, how do I raise invoices as out of scope?

Perplexity says "in the client VAT settings, check the option “Exempt or out of scope for VAT purposes” but on my version of QF there is no setting like this.

The help page states VAT rates explained

" Outside the scope of UK VAT

Some items are outside the scope of UK VAT. In QuickFile applying the “out of scope” option on your invoice will completely exclude those invoices from your VAT return. This will mean that not only will there be no input or output VAT reported in boxes 1 and 4 respectively, these invoices will also be excluded from boxes 6 and 7 of your VAT return."

But doesn’t say how you do this.

Can you help?

Regards

Michael