VAT exceptions and reports in QuickBooks Online
by Intuit•21• Updated 10 months ago
Exceptions are created when you make changes to transactions that have already been filed in a VAT return within QuickBooks Online. This is a way to help make sure that no VAT is missed or duplicated when reporting to His Majesty's Revenue and Customs (HMRC).
QuickBooks automatically creates exceptions when you:
- Change the VAT code in the transaction.
- Add, delete, or change the transaction amount.
- Add or remove an income/expense account line in the transaction.
- Add or remove a customer/supplier to the transaction.
How to create exceptions in QuickBooks Online
- Find the transaction you need to edit.
- Make the necessary changes.
- Select Save.
- You will see a message warning you of the exception that will be created.
- Select Yes to continue.
Show exceptions in reports
- Go to Taxes and select VAT.
- In the Action column, select the dropdown arrow next to the VAT return.
- Select View exception details.
Note: If you're unfiling a VAT return and need to re-create the exceptions, you may want to consider moving them into your current VAT period. Make sure you set the correct date after you make the changes.
View exception details
- Go to Taxes and select VAT.
- In the Action column, select the dropdown arrow next to the VAT return.
- Select View exception details.
If you change the accounting method, you'll need to manually run the VAT Exception Report on the previous accounting method or refresh the report to get the correct figures. To do so, select your previous Accounting method, then select Run report on your VAT Exception Report.
View exception history
To see all the changes made to a transaction shown on the VAT Exception Report:
- Find and open the transaction.
- Select More.
- Select Audit history.
Remember to keep the date of your VAT filing in mind so that you can see when changes were made.
Note: You can choose between the Cash and Accrual accounting methods to report your income and expenses in the VAT Exception Report. If you want to include money that you've already paid or received, use the Cash accounting method. To include unpaid invoices and bills in the report, use Accrual.
Remove exceptions
Before you go ahead and remove the exceptions from the report:
- Check the date of the first VAT filing in QuickBooks.
- Run the VAT Exception Report.
- Check the exceptions dates on the return. If the exceptions on the transaction are:
- Dated on or after the first VAT filing, these are classed as 'genuine exceptions' and will not be removed.
- Dated before the first VAT filing, contact support to have the exception removed.
- If there is no date on the transaction, this would suggest the transaction has been deleted. Select the transaction to find out when it was originally created.
Adjusting the amounts on a return
Note: Speak to your accountant or an accounting professional before creating an adjustment to make sure that your reports are correct after the adjustment. They can view these adjustments in the chart of accounts by searching for the accounts you've made adjustments to.
- Go to Taxes and select VAT.
- Find the return you need to change and select Adjust to increase or decrease the amount as necessary.
Exceptions with no dates
If a transaction in the VAT Exception Report has been deleted or its tax code has been removed, no date will be displayed.
Note: Exceptions will not show on the report unless there is at least one filed return. Exceptions will only appear for closed periods that have been filed in QuickBooks.
If some exceptions cancel out and look to be for the same transaction
If you delete and re-create a transaction for a previous period, then the exceptions report will show both changes as exceptions but will net out to zero. This is also caused by changing 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.
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