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Set up and edit VAT settings, VAT codes, and VAT rates

This article is for all UK VAT-registered businesses using QuickBooks Online to calculate and submit VAT to HMRC.

Set up VAT

To manage your VAT process, you will need to set it up in the VAT Centre. To access the VAT Centre, start by clicking on VAT on the left navigation.  Setup VAT by entering a VAT Registration number, the month the current period begins, and the VAT accounting scheme and filing frequency. Once that is done, you are ready to file your VAT. You can always edit your VAT settings after setup.

Set up VAT:

  1. Go to Taxes, then select Set up VAT.
  2. On the Set up VAT page, select the beginning month of your current VAT period.
  3. Select your filing frequency.
  4. Next, choose your VAT accounting scheme.
    • Standard: also known as accrual, select this option if you count your income when you invoice your customer
    • Cash: select this option if you count your income when you receive money from your customer
  5. Enter your VAT registration number.
  6. If your business is entitled, select the Flat Rate Scheme (FRS) checkbox.​
  7. Select Save Your VAT codes are now set up.

Edit your VAT settings, codes, and rates

  1. Go to Taxes.
  2. Select the Edit VAT ▼ drop-down arrow.
  3. Select Edit settings or Edit rates.

​Edit settings: Make changes to your VAT registration number, changes to your filing frequency, (ex. move from monthly to quarterly), or amend your VAT accounting scheme from a cash basis to the accrual basis.

Edit rates: Amend some (not all) percentage rates for particular VAT codes. You cannot alter the standard rates for sales and purchases. You can amend the rate of percentage for reduced sales and purchase tax. A drop-down rate history shows the different rates used.

Add additional tax rate, group rate, or custom tax

To set up an additional tax rate, group rate, or custom tax to your company, follow the steps below.

  1. Go to Taxes.
  2. Select Add Tax.
  3. Select the type of tax you want to add.
    • Tax rate: add another tax rate for VAT, such as a local tax that is not already included.
    • Group rate: combine multiple taxes and make applying them to your transactions easier. All taxes you include are calculated and charged at once, but we track them separately for you.
    • Custom tax: add a tax agency and a tax percentage, such as an environmental levy, hotel, or petrol tax.
  4. Select Save.

From April 2019, all eligible UK VAT-registered businesses will have to keep their financial records in a digital form and submit their VAT returns using approved software. Find out whether you are eligible here.

If you are eligible, you'll have to authorise QuickBooks to interact with HMRC. You can choose to do so now, or later, as long as it is completed before submitting your VAT return.

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