Hi there, My client is operating under the flat rate scheme using the rate of 10.5% (the company isn't classed as a limited cost trader). One of their customers recently went into liquidation, leaving some significant bad debts. Upon reading HMRC's guidance on the flat rate scheme (notice 733, section 14.1 https://www.gov.uk/government/publications/vat-notice-733-flat-rate-scheme-for-small-businesses/vat-notice-733-flat-rate-scheme-for-small-businesses ), I discovered that VAT on bad debts can actually be claimed using the standard rate, rather than the flat rate. I understand that when filing a flat rate VAT return on Quickbooks, sales invoices are posted using the standard 20% as usual, then Quickbooks automatically applies the flat rate percentage to the VAT return. This means that if I post a credit note against these bad debts, then Quickbooks will apply the 10.5% rate to these credit notes on the VAT return, rather than the 20% which is allowed. Does anybody know how I will be able to change this so that Quickbooks picks up VAT @ 20% on the credit notes, rather than the flat rate? Any help will be much appreciated!
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