QuickBooks HelpQuickBooksHelpIntuit

Create and manage VAT exceptions in QuickBooks

by Intuit•36• Updated 1 month ago

When you make changes to transactions already included in a VAT return, QuickBooks Online creates exceptions. These exceptions help ensure that your VAT filings to HMRC remain accurate, preventing any VAT from being missed or duplicated.

This article is for customers who use QuickBooks Online.

What creates a VAT exception?

QuickBooks automatically creates a VAT exception when a transaction from a filed return is edited. This includes changes to amounts, VAT codes, or even customer and supplier details.

Exceptions are created when you:

  • Change the VAT code in the transaction
  • Add or remove an income or expense account line
  • Add or remove a customer or supplier from the transaction


Create and view exceptions in QuickBooks

Exceptions are created automatically when you make certain changes to a filed transaction. Here’s how to trigger one, if necessary.

  1. Find the transaction you need to edit.
  2. Make the necessary changes.
  3. Select Save.
  4. You will see a message warning you of the exception that will be created.
  5. Select Yes to continue.

You can review VAT exceptions in QuickBooks to ensure no incorrect changes have been made. This is useful for checking if all changes are intentional and correctly dated.

  1. Go to Taxes and select VAT.
  2. In the Action column, select the dropdown arrow next to the VAT return.
  3. Select View exception details.

Note: If you unfile a VAT return and want to re-create exceptions, consider moving them into your current VAT period. Be sure to adjust the date correctly after making changes.

Once you’ve opened a VAT return, you can drill into exception details to see which transactions were changed and how.

  1. Go to Taxes and select VAT.
  2. In the Action column, select the dropdown arrow next to the VAT return.
  3. Select View exception details.

Tip: If you’ve changed your accounting method (e.g. from Accrual to Cash), manually refresh the report or switch back to the original method to view accurate exception figures.

The VAT Exception Report shows changes, but if you want to see exactly what was altered and when, use the Audit History.

To see all the changes made to a transaction shown on the VAT Exception Report:

  1. Find and open the transaction.
  2. Select More.
  3. Select Audit history.

Keep the original filing date in mind to track changes that occurred after submission.



Reporting by accounting method

You can run the VAT Exception Report using either the Cash or Accrual method, depending on how you report VAT.

  • Use Cash accounting to include only money received or paid.
  • Use Accrual accounting to include all unpaid invoices and bills.


Remove VAT exceptions

Before removing exceptions, it’s important to check their date and filing context. Not all exceptions can be removed—some are valid and must remain for accurate reporting.

  1. Check the date of the first VAT filing in QuickBooks.
  2. Run the VAT Exception Report.
  3. Review the exception dates:
    • On or after your first VAT filing: These are considered valid and cannot be removed.
    • Before your first VAT filing: Contact QuickBooks support to have these removed.
    • No date showing: This usually means the transaction has been deleted. Open it to view when it was originally created.


Adjust the amounts on a VAT return

You can adjust amounts in a VAT return if something needs to be corrected. However, always speak with your accountant before doing this to ensure your records stay accurate.

  1. Go to Taxes and select VAT.
  2. Find the return you need to change and select Adjust to increase or decrease the amount as necessary.

Note: Your accountant can view these adjustments in the Chart of Accounts by searching for the affected accounts.



Understanding exceptions with no dates

If a transaction is deleted or its VAT code removed, the VAT Exception Report may show no date. This can make it harder to trace, but it’s usually due to the record being deleted from a previously filed period.

Important: VAT exceptions only appear for returns that have already been filed. If there are no filed returns, exceptions won’t show up in reports.

Sometimes the VAT Exception Report may show changes that cancel each other out. This often happens when:

  • You delete and re-create a transaction from a previous period.
  • You edit and save a transaction without changing the VAT amount.

In these cases, the exception entries may show a £0.00 rated amount. This is normal and won’t impact your VAT filing balance.



What's next?

You might also be interested in how to:

QuickBooks Online EssentialsQuickBooks Online Payroll AdvancedQuickBooks Online Payroll StandardQuickBooks Online PlusQuickBooks Online Simple Start

Sign in now for personalized help

See articles customized for your product and join our large community of QuickBooks users.