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Concepts - VAT Return

Concepts - VAT Return

VAT Rates and Other Settings

  • VAT Rates & VAT Scheme

        The VAT rates are set up using the Tools -> VAT Rates option

        The VAT rates are dated with an effective date and allow for the input of the standard and reduced rate.

 

 

 

  • VAT Fuel Scale Charges

         You must specify on what basis you are reclaiming VAT on road fuel. This can be set up using the Tools -> VAT Fuel Scale              Charges option

  • Exchange Rates and International Trading

    If you selling products and services outside of the UK , you must maintain a monthly Exchange rate for each currency you transact in. These rates are published on the HMRC Website and currently you must download this on the 1st of each month and enter them here, using the Tools -> Exchanges Rates option.

Any non-sterling invoices you generate for international trading must include the VAT amount in the base currency (eg. British Pounds).  The exchange rates set up here will be used to determine the amount of VAT.

For the purposes of the VAT returns, any non-sterling transactions will be converted back to British pounds and these converted values will be used for VAT Reporting purposes.

 

  • VAT period Dates

    These are set up using the VAT Returns form.

The new VAT Quarter dates should be updated at the start of each new VAT period, by selecting the start and end dates and clicking the Create VAT Return button.

The system will automatically create a new VAT return for the period. If you are running a multi branch system, then a VAT return will be generated for each branch for the selected period.

Locking a VAT Return

When a VAT return has been submitted to the HM Revenue and Customs, you should Lock the Return so that no financial transactions can be entered that may effect the submitted VAT Return. If you are running a multi branch system, see the multi branch considerations below.

The Lock Return link will only be displayed when the VAT period is complete.

 To Lock the return, click the "Lock Return" link for the required VAT return. Once a VAT Return is locked, you will not be able to enter or amend the financial transactions that have a date on or before the VAT End date of the selected quarter.

All Unlocked VAT Returns prior to the selected VAT return will also be locked automatically.

 

 

Unlocking a VAT Return

If you are a user with Administrator rights, you can also unlock a VAT return that has ended in the last 13 months.

This should be done with care and only in exceptional circumstances.

To Unlock a VAT Return, press CTRL + U. This will show an Unlock column on the VAT Return form.  Those VAT Returns that have ended in the last 13 months will have an Unlock Link next to them.  If you a unlock a VAT Return that isn't the last one that has been locked, the system will unlock all the VAT returns after the selected one.

If you are running Multiple Branches and therefore submit one VAT return for all, the VAT Returns are locked for All Branches. To Unlock , first select the "All Branches" from the Branch list on the top left of VAT Returns form.

All locked VAT Returns after the selected VAT return will also be unlocked automatically.

 

 

Multi Branch Considerations

If you are running a Multi Branch System please be aware of the following

  • When updating the Current VAT Quarter Dates, the system will automatically create new VAT Returns for each Branch

  • You can only Lock the data for a VAT Quarter when the "All Branches" branch has been selected ( as Shown above). This will Lock the transactions for all branches up and including the "Date To" of that VAT Return.

 

Excluding Income and Expenditure from VAT Return

If you want to exclude certain income or expenditure entries from the VAT Return, these can be specified on the Income Type (10015) / Cost Centre (10016) parameter records.

 

See https://www.gov.uk/guidance/how-to-fill-in-and-submit-your-vat-return-vat-notice-70012 on details of which elements to exclude from a vat return. Eg.

  • wages and salaries
  • PAYE and National Insurance contributions
  • money taken out of the business by you
  • loans, dividends, and gifts of money
  • insurance claims
  • Stock Exchange dealings (unless you’re a financial institution)
  • MOT certificates
  • motor vehicle licence duty
  • local authority rates
  • income that’s outside the scope of VAT because it is not consideration for a supply

 

To Exclude an Income from the VAT Inputs:

Specify the word EXCLVAT in the SubID column of the required income type parameter record as shown below

To Exclude an Expenditure from the VAT Outputs:

Specify the word EXCLVAT in the SubID column of the required Expenditure type parameter record as shown below

 

EU /EC Supply considerations

When completing Box2, Box 8 and Box 9 of your VAT return, the HMRC guidlines are to "Show the total value of all supplies of goods to other EU member states and directly related costs, such as freight and insurance". 

This means that "separate supplies of services, such as legal or financial services" should be excluded from these figures.

To mark a cost centre as include the word VATSERVICES in the SubID column of the required Expenditure type parameter record as shown below. This can be in additional to EXCLVAT word if required. Eg. EXCLVAT:VATSERVICES

Any non-job related Services income  entries can be marked are VATSERVICES by include VATSERVICES word in the Sub ID column of the 10015 (Income Types) parameter records

Any job/invoice related Services income entries can be marked are VATSERVICES by include VATSERVICES word in the Sub ID column of the 10021 (Sales Types) parameter records

All Transactions that are excluded from a VAT Return are available to view in the VAT Return Audit form under the Excluded Transactions Tab as shown below