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QuickBooks VAT return guide

SOLVEDby QuickBooks3Updated 2 weeks ago

This article is for small businesses that have not yet signed up for Making Tax Digital (MTD). We'll cover what you need to know before making a submission, how to submit a return and how to mark it as filed in QuickBooks. Plus, alternative ways to submit a return and get answers to frequently asked questions.

Already signed up for MTD? Great! Follow these steps to submit a VAT return.

Before you submit a VAT return

  • Non-MTD submissions (like XML submissions) are no longer supported in QuickBooks. This means VAT-registered businesses that are not yet registered for MTD will be unable to submit return via the old way in QuickBooks. We'll cover alternative ways to submit a VAT return in this article.
  • If you're on the Flat Rate Scheme or submit your VAT returns annually and are not yet signed up to MTD, you'll need to file through the HMRC Government Gateway. Once you've filed through the gateway, go to Mark your VAT as filed in QuickBooks to close the period.
  • Check your reports to make sure your figures are correct. In Taxes, select the ▼drop-down arrow next to Prepare/Submit return to view the following reports:
    • VAT 100 report (this shows you the summary information for each box on the return.)
    • VAT detail report (this lists transactions that are included in each box on the return.)
    • VAT exceptions and reports (see transactions you have previously filed for but have since changed, deleted or added. Check that no VAT collected or credits earned are missed or duplicated.)
  • If you need to make corrections to your sales or purchase VAT, here's how to adjust VAT liabilities.

How to submit a return directly to HMRC

  1. Go to Taxes, and select VAT (Take me there).
  2. Select Submit return to view your open return.
  3. Confirm the dates and figures are correct. When you are ready to submit your return, select File online with HMRC.
  4. Enter your Government Gateway user ID and password, then select Yes, I want to proceed. QuickBooks will now connect to HMRC to submit your VAT return.
  5. When HMRC receives your VAT return, you will see the "Pending with HMRC." status and the message "HMRC is on the case. We'll notify you when the status of your VAT return changes.".
  6. Select Close and continue working.
  7. If your VAT submission is successful, the status will change to Approved by HMRC. You will be able to see the filing when you log into your HMRC account.

If you submit returns the old way don't worry, here are some different methods you can try.

Submit a return using your Business Tax Account

This is HMRC's online account which brings all your business taxes together and allows you to submit returns and make payments. Sign in to your account here.

Submit a return through your agent

You can appoint an accountant or other approved agent to submit your VAT returns for you. Agents won't be unable to use XML software, but they can submit your returns using their online Agent Services Account. We recommend reaching out to an agent/accountant for more help.

Sign up for Making Tax Digital

If you are a VAT-registered business with a taxable turnover above £85,000, you should already be following the MTD rules like keeping digital records and submitting your returns using MTD-compatible software. Submitting VAT returns using XML software does not meet these rules.

From April 2022 all businesses, no matter what their annual taxable turnover is, must sign up to MTD. For more information on signing up, here's everything you need to know about MTD for VAT.

How to mark VAT as filed

If you don't have the option to submit your return or you prefer to file your VAT directly with HMRC, follow these steps to mark your return as filed and close the period.

  1. Go to Taxes, and select VAT (Take me there).
  2. Select Prepare return to view your open return.
  3. Confirm the dates and figures are correct. When you are ready to submit your VAT return to HMRC, select File online with HMRC.
  4. Select Submit a VAT Return/Set up a VAT Direct Debit Instruction, then select Submit a return. Copy the amounts from your QuickBooks Online return to the HMRC website.
  5. Once you're done, go back to QuickBooks Online and select Mark as Filed.
  6. You can now close the books to protect transactions entered in the quarter you just filed.

Once you've paid off the liability to HMRC, you can record a VAT payment or refund.

How to view submitted returns

  1. Go to Taxes, and select VAT (Take me there).
  2. Select View return against the VAT return you wish to view. Or select the ▼dropdown arrow for more options.
  3. You will see 'The VAT return was accepted by HMRC', as well as details of the submission.
  4. Click Done to close the window and return to the Taxes dashboard.

How to calculate open transactions

An open transaction is the difference between what's been paid on the old VAT accounting scheme and what would've been paid on the new scheme, between the start date for the new scheme and the end date of the last filed period.

To calculate open transaction you'll need to:

  1. Run the VAT 100 report from the beginning of when you started using VAT to the end of the last VAT Return.
  2. Run the report once on the cash accounting method.
  3. Run the report again on the accrual accounting method.
  4. Take the difference between the two reports to get the Open Transactions figure.

Frequently asked questions

It's not possible to reverse or undo a return that has been submitted to and approved by HMRC. Any adjustments that need to be made to return that has already been submitted will typically require you to make a following VAT return according to the HMRC guidelines. For more help, we recommend reaching out to HMRC directly.

Not currently. You can save your HMRC user ID and password using your browser. To do this, select the prompt Remember my password, then select Save or Yes.

Make sure your type in your Government Gateway password in lower case. If you're already doing this, then your VAT registration number may be causing the issue. Select Edit VAT, then select Edit settings. Make sure that there are no spaces between characters in your VAT registration number. If the number starts with GB, you'll need to remove this as well.

Your VAT control may not match with your VAT return if you've added any transactions in the period after the VAT return was created. For example, if you've filed the return for the period 01/01/2021-31/03/2021 on 07/05/2021, but you've added transactions after 31/03/2021, then those will also show in the VAT control.

If you have added/deleted/amended transactions from the previously filed period, then those transactions would show up in the next open VAT period as exceptions.

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