By using xero.com, you accept our cookie notice terms. MTDfV stands for Making Tax Digital for VAT a program introduced by the government to make submitting VAT returns easier by helping businesses store records digitally to automate payments and returns. PVA is quite a complex topic. ASE Professional Services is a trading style of Armstrong Watson Audit Limited and Armstrong Watson LLP. You are hopefully also aware it's always normal vat being billed the flat rate only evr comes into things on return calcs - not how you bill. Box 1 would then show 5,000. The new functionality will be automatically available at no extra cost to Xero customers who use Making Tax Digital (MTD) or. In addition to the purchase of a car, mistakes are commonly made on lease cars, where 100% of VAT is recovered as input tax. If you can please raise a case here someone will get in touch with you to help answer your questions as clearly as possible. Tide offers bank accounts provided by ClearBank Ltd (ClearBank) (account sort code is 04-06-05). If you dont have a Xero Certified Adviser, you can find one here. Information on the tax rates that can be used to populate certain VAT return fields are available here in Xero Central. However, for an easy life and given the experts say don't include it, I may just exclude it from Box 6 and if HMRC ever question this, I will ask to show where it explicitly says it one way or the other. It may no longer be for him. Apologies if any of above is wrong peeps. If youre using the flat rate VAT scheme, the amount entered into box 6 should be the gross income youve applied the flat VAT percentage to. The good news is that as of today, Xero now supports the Flat Rate Scheme and we promise to keep it simple for you. Any such supplies youve had and made should be accounted for under the reverse charge provisions.https://www.gov.uk/guidance/the-vat-domestic-reverse-charge-procedure-no khalm0 The new flat rates for types of businesses can be found on the HMRC website. Contact our Support team now on phone01277 284499. Required fields are marked *. Armstrong Watson LLP for more information about creating and accessing your cases. Personal expenses are exempt too, although you may be able to claim a proportion of the VAT back on an item that has dual business and personal use. See below, or. Explanation of some common VAT terms 3. Its a faster and more efficient way to complete your VAT Returns, and means you wont have to pay your VAT upfront and recover it at a later date, which will help you manage your cash flow. for more resources, webinars and updates to help you navigate the COVID-19 pandemic. Because these purchases are included in every VAT return, mistakes rarely happen. VAT is constantly evolving. Use our flat rate Making Tax Digital (MTD) VAT return if you're on a VAT flat rate scheme. Will I still be able to use Xero for MTD when I buy from EU? Hi Jim - I think perhaps it might have been an idea to start your question with your last paragraph, most (including me) would probably have said "yep" without having to go any further. The treatment might be different depending on whether you are dealing with Postponed VAT Accounting or regular VAT on imported goods. There is a code you need to create in the system, this article will help youhere with that, however just to let you know there will be no adjustment button made in the system for it though. Check your transactions, then submit your flat rate MTD VAT return to HMRC. Box 6 is not only FRS turnover alone, which some sources state it is. You charge your customers at the appropriate rate (e.g. You may wish to ask your adviser to do this sense check for you. Be the first to hear about our webinars, new features and business tips to help you save time and money. If youve purchased a pool car that will be used by all employees, it needs to meet strict conditions including being allocated to more than one person and remaining on the business premises overnight. We should all now know that Outside of Scope applies are not included in FRS turnover. Some of Tides members also hold e-money accounts provided by Prepay Solutions (PPS) (account sort code is 23-69-72). The rate you pay depends on your business activity and is a rate you agree with HMRC. I am on a flat rate scheme. If your status is Failed, click on the VAT Return link to read the error message, or read the notification in your Xero inbox. Check the Include VAT Late Claims box to include late claims on the return, provided you have published your previous periods return. To reclaim VAT on any business expense, you must provide evidence in the form of a VAT invoice. 9. Visit our dedicated site for more resources, webinars and updates to help you navigate the COVID-19 pandemic. Getting started with client engagement letters, A fool-proof marketing strategy for accountants, How digitalisation will help grow your practice, Filing options for small companies up for change. HMRC are expecting Box 1 to be X% of Box 6. Your email address will not be published. Well explain the various VAT schemes in more detail in a later section. Perform the following steps to complete a VAT return: 3. That said, I'd encourage you to send feedback or product suggestions from QBO where they will be sent directly to our engineers. I show you how to set up your Xero Account for the Flat Rate Scheme, how to record your transactions and how to check what then appears on your VAT return. To do this go to Settings>General Settings>Financial Settings. With the ongoing situation around COVID-19 and Britains withdrawal from the EU (Brexit), as well as HMRCs drive towards making VAT easier for VAT-registered companies, theres likely to be new rules and regulations to come. An exchange in the Xero forum revived the old "do you /don't you include" in box 6 of a flat rate scheme return(FRS) for non EC outside the scope supplies. You alone are responsible for figuring out if you sell any items that fall into these categories, what amount of VAT to charge if you do and exactly how to report those special cases. Are you aware of this fact - ie the 16.5% is clauclated on gross vat inclusive sales not net sales. A common VAT return mistake is when fuel purchased for personal use is claimed alongside fuel purchased for business travel, which often happens when a vehicle has dual business and personal use. Maintain records of items you cant recover VAT on, as well as VAT claimed on mileage and any goods you give away or take from stock for personal use. You must ensure the settings are correctly set up in Xero, so it knows that youre using the flat rate scheme. e.g. ClearBank is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority under registration number 754568. That's what the bit of the manual you quoted says, a retrospective withdrawal should be refused when the date requested falls within a return period that has already been filed. From 1 January 2021, controls will be placed on the movement of goods between the UK and the EU. You can unsubscribe anytime using the link in the footer of any of our emails.See our privacy policy. Confirm the VAT No. Errors that exceed the threshold must be reported and cannot be adjusted on a future VAT return. I can send some feedback through the software. Top Tip: Good bookkeeping helps you keep tabs on your day-to-day financial data, monitor your cash flow and evaluate your success. Im still confused.have all my products from europe set up as 20%vat from eu.do i change them all to no vat as my chinese imported goods? how much VAT you charge to customers). Your email address will not be published. Box 6 is the problem for me. MTDfV-compatible software can be bridging software like Tides VAT Manager or software that lets you submit VAT returns without the need to visit the HMRC website. As a side issue how does other software handle outside the scope of UK VAT income for box 6? Top Tip: Making Tax Digital is designed to reduce the risk of human error in VAT and tax returns. It might be best for you to speak with someone in our support team directly so they can give you a hand. You can also find out more on our Brexit Hub. style of Armstrong Watson Financial Planning Limited. Is that interpretation wrong? To learn more about the VAT threshold in the UK, read our guide to the VAT threshold and when should you register for VAT , If Annual accounting scheme:-Improves cash flow as you pay VAT less frequently (in monthly or quarterly instalments), If Annual accounting scheme:-Can only reclaim input tax once a year, which is damaging if you rely on cash from reclaiming VAT throughout the year. For VAT Return periods starting after 1st June 2022, import VAT accounted for using postponed VAT accounting (PVA) should not be included in your flat rate turnover. All Rights Reserved. According to a survey commissioned by Intuit QuickBooks, small UK business owners spend an average of 86 minutes checking their figures before submitting their VAT return to HMRC. Tip VAT registered businesses must use HMRC's Making Tax Digital (MTD) services (HMRC website) to submit VAT returns. how it happened, the date it was discovered and the amount of VAT involved), Include the value of the error in your VAT account. Registered to carry on audit work in the UK by the Institute of Chartered Accountants in England and Wales. Your email address will not be published. You can find a full list of UK VAT rates on different goods and services on the GOV.UK website. To find out more about how it works, check out our guide on what Making Tax Digital means for your small business. PPS is a trading name of Prepay Technologies Ltd which is an electronic money institution authorised by the FCA under the Electronic Money Regulations 2011 under firm reference number 900010 for the issuing of electronic money. Thanks for the reply. I hope it's in order to generate a new post for an old chestnut (its age means it no longer invites responses). You can also find out more on our. To contact us, simply click the Help icon at the upper right hand corner of the screen while youre logged into Xero. You can also check out our support article for more information about creating and accessing your cases. This will help HMRC calculate your Monthly Postponed Import VAT Statement (MPIVS), which will be available in your HMRC portal. Details about our audit registration can be viewed at www.auditregister.org.uk, under reference number C005636012. When preparing her year-end accounts in December, she noticed that she recorded the same purchase invoice for 1,500 plus VAT (20%) twice: once in February and once in March. From 1 October 2021, a new reduced rate of 12.5% will apply. Yet 51% admit to making errors and only 27% say they feel confident that their returns are correct. registered office is 15 Victoria Place, Carlisle, CA1 1EW. By using xero.com, you accept our cookie notice terms. This will help your efforts massively. How to do a VAT Return in Xero XU Academy 6.4K subscribers Subscribe 514 Share 34K views 4 years ago VAT in Xero In this video I show you how to do a VAT return in Xero. You then reclaim VAT from your suppliers' invoices, whether or not you have paid the bill. All content 2020 Armstrong Watson. By subscribing you agree to receive marketing communications from Tide. If youre using the cash accounting scheme or the standard accounting scheme, box 6 should include your income net of VAT. Armstrong Watson LLP is a limited liability partnership registered in England and Wales, number OC415608. We are using QB Desktop as per the tag. If you realise youve entered the wrong figures on your VAT return, try not to stress. Can you elaborate on your question somewhat - being frank your post suggests you may not fully understand how the flat rate process works.- apologies if you do and its simply my lack of ability to understand your point here. An exchange in the Xero forum revived the old "do you /don't you include" in box 6 of a flat rate scheme return (FRS) for non EC outside the scope supplies. Similarly, HMRC doesnt allow VAT to be recovered on the purchase of a car unless you can prove that it will be used exclusively for business reasons. If not, delegate the role to someone with sufficient knowledge and expertise to keep you VAT compliant. There is a not a massive inconsistency here as presumably hmrc give any business the benefit of the doubt that as far as they are concerned vat is not calculated till its submitted. Top Tip: If youre a VAT registered company, youll need to provide and record VAT invoices. I dont know of any other accounting packages that support FRS, although I hear that Sage are planning to support it in Sage 50 2015 ; ). And I'm now intrigued to know if the FRS VAT return I've just submitted now is technically wrong (though no tax loss). This walkthrough guides you This is because the FRS exists to simplify VAT accounting and record keeping, so allowing a business to spend less time on VAT. You can find a full list of MTDfV software on the GOV.UK website. By understanding the three main VAT schemes for small businesses, youll be able to choose the one thats right for your business and ensure the figures on your VAT return are correct. The changes associated with Brexit can be overwhelming, but were here to make them as easy as possible for you. The registered As we are not across any specifics about your business or how you normally do things we must be mindful not to provide accounting advise we recommend that you speak with your Xero Certified Adviser for specific advise regarding your situation. If you cant or dont want to use PVA, therell be no change to the way you deal with VAT on imports for your business. 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