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VAT exceptions and reports in QuickBooks Online

SOLVEDby QuickBooksQuickBooks Online511Updated March 09, 2022

When preparing VAT returns, you may see a column titled Exception Amount in QuickBooks Online.

What are VAT exceptions?

The amounts in this column represent transactions you have previously filed for, but have since changed, deleted or added. This is to ensure that no VAT collected (or credits earned) are missed or duplicated.

A few reasons for exceptions are if you make changes to:

  • A transaction in a filed period. For example, one that has been added, edited or deleted.
  • A VAT code. QuickBooks will factor the difference between amount filed and the new value, sometimes this can be a net 0 difference. For example, changing VAT code 0% to be Exempt.
  • The amount. Quickbooks will factor the difference between amount and filed and the new value.
  • An income/expense account line. The net 0 difference will show.
  • A customer/supplier. The net 0 difference will show.

How to create exceptions in QuickBooks

To create an exception:

  • Delete a transaction to create a negative exception value
  • Create a transaction to create a positive exception value
  • Add another line item to an existing transaction
  • Remove a line item to an existing transaction
  • Change a VAT code (this may cause positive or negative exception values)

If you're unfiling a VAT return and need to create exceptions, you may want to consider moving them into your current VAT period, and setting the correct date once changes to the VAT return have been made.

Yes! To view the exceptions that are part of a return:

  1. Go to Taxes and find the VAT period.
  2. Then, select the dropdown arrow, select View exception details. This will give you line-by-line, transaction-by-transaction details for your exceptions.
  3. After changing the accounting method you must run the exception report manually on the old accounting method or reload it to get the correct amounts.

If you want to see all the changes made to a transaction showing on the exception report:

  1. Go to the transaction and select More.
  2. Select Audit history.

Remember to keep the date of your VAT filing in mind so that you can see when the edit or change happened to the transaction.

Note: You can choose between the Cash and Accrual accounting methods to report your income and expenses from the exception report. If you want to include money that you've already paid or received, select the Cash accounting method. If you want to include open invoices and bills in the report, then select Accrual.

If you delete and recreate a transaction for a previous period, then your exceptions will show both changes as exceptions but will net out to zero. This is also caused by editing and saving a transaction, even if the line item in question was not changed. This is perfectly normal and should not affect the balance of your filing.

If you've made a change that doesn't impact the overall value of the transaction (for example, customer or supplier, or income and expense account), you will see a £0.00 rated amount on your VAT Exception Report. You'll also see this rated amount if you delete and re-add a transaction in a filed period.

When filing your return, use the adjust link to increase or decrease the amount as necessary.

Before creating an adjustment, speak to your accountant or an accounting professional (if necessary) to ensure that your reports are correct after the adjustment. They can view these adjustments or previous adjustments by going to the chart of accounts and searching for the accounts you've made adjustments to.

If a transaction in this report has been deleted or its tax code has been removed, no date will be displayed next to them.

Note: Exceptions will not appear unless there is at least one filed return. Exceptions will only appear for closed periods that have been filed in QuickBooks.

How to determine if exceptions can be removed
Check the following options:

  1. What is the date of the first VAT filing in QuickBooks Online.
  2. Run the VAT exception report.
  3. Check if any of the exceptions are dated on or after the first filing.
    If YES - These are classed as genuine exceptions and will not be removed.
    If NO - please contact support to have a VAT exception removal processed.
    If there is no date on the transaction, this would suggest the transaction has been deleted and you'll need to click into the transaction to find the create date.

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