Flat rate scheme incorrect

I can share some information with the VAT Flat Rate Scheme, @Paula Jane.

I suggest reaching out to an accountant or tax adviser in verifying if your VAT is due on the net amount or the gross amount. After that, I suggest reaching back to our Customer Support to get into details and explain it further to you.

You can reach our Customer Support for QuickBooks Online (QBO) by going to the Help icon at the top right of the account. Follow the steps below: 

1. Go to the Help icon to connect to a live support agent. 
2. Click on the Contact Us button and provide some details about this concern.
3. Provide us with some information about your concern in the What can we help you with? box and click on Continue.
4. You'll now be provided options on how to connect to our Customer Support.

Check the following article to know about the different types of support we offer and their availability: QuickBooks Online Support.

Here's an article that tells you more about submitting VAT returns using the Flat Rate Scheme (FRS) method: Flat Rate Scheme (FRS) in QuickBooks Online. 

If you have other questions about your transactions, I'm happy to answer them for you. Just post it here as a reply and I'll take a look at it. Have a good one!

I have already spoke to a live support agent. They were of no help.

I do not need help with using the flat rate scheme. The flat rate scheme calculates VAT on the gross figure not the net. I already have an accountant and we have used the scheme for 15 years.

This is taken from the HMRC website:

'Example You bill a customer for £1,000, adding VAT at 20% to make £1,200 in total.

The VAT flat rate for your business is 11%.

Your flat rate payment will be 11% of £1,200, or £132.'

The fault is with Quickbooks which is calculating the VAT on the net figure not the gross figure. As you can see from the above, this is incorrect.

Please advise as to what you will do to address this.

I have never before posted on anything however after being on a chat for 30 mins i had to

The flat rate vat scheme does not work in QB. it is designed not to as i was told on a customer support chat. I will give the following simple explanation.

If is have a sale of £120 inclusive of vat (my rate is 7.5%)

the P/L should shows

Sales          £111 (net of VAT)

VAT control £9     (7.5% of £120)

It actually shows 

Sales          £100

VAT control £20

So the P/L and B/S are wrong. Once the VAT return is submitted it apparently changes the amount to the correct figures.

So for 4 days of the year the accounts are correct and the remainder of the time they are wrong.

How can you have a system that is fundamentally flawed. How did it pass HMRC acceptance

Hello Mark344, thanks for posting on this thread, 

Flat Rate Scheme in QuickBooks works in the same way as under the Standard VAT Scheme. As long as you have set up the FRS in the VAT settings, the system will automatically calculate the vat in FRS percentage that was set-up.

Under the Standard VAT Scheme, businesses calculate the VAT they owe to or can claim back from HMRC as the difference between the VAT you charge their customers and the VAT you pay on purchases. So, if a business creates a sales invoice for £100 plus VAT using the Standard scheme, you would owe HMRC £20.

This is done automatically in QuickBooks as soon as an invoice is saved, and businesses can see the total amount of savings in your VAT return. In our earlier example, the business would have saved £5.60.

Whilst in Flat Rate Scheme.

If, for example, a business creates a sales invoice for £100 plus VAT using the FRS, you would owe HMRC the flat rate percentage of the gross of the invoice. So, if the flat rate percentage is 12% on an invoice for £120, then the business would owe HMRC £14.40.

Here is an article to have a look at that has more information. Understanding the Flat Rate VAT Scheme in QuickBooks Online

I think you are purposely not answering the question as you have in other posts.

I am talking about the P/L and B/S. not the VAT return please stop taking about the VAT return. I know that work.

The revenue in the accounts is showing £100 but should be showing £111 why is that please answer the question i have asked and not one i have not asked

Hello Mark344, if it shows VAT on the reports, it will show as a default code that is used because you should also be on one of the reports a Savings by FRS amount as well what will account for the difference between the 20% and the FRS amount to show whether or not it’s the correct scheme to be on, also the savings by FRS shows on the profit and loss. 

It shows 20% cause there should also be on one of the reports a Savings by FRS amount as well what will account for the different between the 20% and the FRS amount to show whether or not its the correct scheme to be on. It will only show savings by frs when it is submitted in the system. How to set up the Flat Rate VAT Scheme in QuickBooks Online 

The person on the chat took me to the reports page and we typed in savings, there is no report by that name.

I am very confused by your answer. 

What amount on the P/L should i see in the following example

Net sales £100

Standard VAT 20%

Total invoice £120

Flat rate scheme 7.5%

Please tell me the accounting entries i should see in the system

Thanks for getting back on this thread, @mark344. 

Instead of Savings, search for the Profit and Loss report from the reports page. This shows your business's income and expenses, regardless of the balance sheet accounts. 

If you have already filed a return under the Flat Rate Scheme through Making Tax Digital, it isn't possible to edit or delete any transactions. However, if you need to change a previously filed transaction, there is a way to reverse it. Here's how:

1. Create a journal entry to reverse the original transaction. It can be done by changing the amounts of the debits and credits.
2. After creating the journal entry, you can create a new transaction with the correct information.

Please know that we're unable to provide more specific details regarding tax accounting questions since the entries in QuickBooks may differ.

For a detailed process, check out this reference: How to set up the Flat Rate VAT Scheme in QuickBooks Online.

Also, I'll add this article again that covers everything you need to know about the FRS: Understanding the Flat Rate VAT Scheme in QuickBooks Online.

You can always reply or reach out to us again if you need anything else with VAT or concerns about the reports. We're always here to guide and assist you whenever you need help. Take care always.

I am really not sure how many more times i can keep asking the same question without getting an answer to the question.

PLEASE Do not give me an answer to a question i have not asked.

I have run the P/L account and it shows the wrong amount for the sales.

it shows sales as £100, but should show £111. please see figures from previous post

WHY IS THE P/L SHOWING THE WRONG AMOUNT FOR SALES

Thank you for getting back to us, @mark344. I'm here to help ensure your Profit and loss (P&L) report will show the correct income tax in QuickBooks Online (QBO).

When you use the FRS, you'll have to pay a fixed percentage of your VAT to HM Revenue and Customs (HMRC), depending on the type of business. In other words, if a business uses the Standard plan to issue a sales invoice for £100 plus VAT, it will owe HMRC £20. QuickBooks will do the calculation for you on the VAT return for the FRS.

For example, If you have sales or expenses, you should include the 20% standard rate VAT. QuickBooks will work it out according to your FRS %.

The reports will always show as a net figure. The VAT return itself will show the amount in a gross figure unless you select the amount, and it will be displayed in a net figure associated with $111. From there, you can identify the transactions that are the source of the discrepancy.

Here's an article that tells you more about submitting VAT returns using the Flat Rate Scheme (FRS) method: Flat Rate Scheme (FRS) in QuickBooks Online.

I'm always around here in the Community if you have any other concerns about sales taxes in QBO. Feel free to post again here. Have a good one, and keep safe.

So you are agreeing with me that QuickBooks accounts are wrong.

That the accounts show the incorrect figure in the P/L revenue line.

This is very worrying as we use the P/L reports on a regular basis.

Based on the information you have provided this is a fundamental flaw in the system.

can someone call me tomorrow to get a workaround for this problem

Hello there, @mark344.

In QuickBooks Online, you can ask for a callback. An expert will call you with a background of your concern stated in the request. I'll help you create one.

Here's how:

1. Click the Help menu in the upper-right-hand corner.
2. Type in Talk to a human, then press Enter.
3. Look for I still need a human and click on it.
4. Click Get help from a human or Contact Support Team.
5. Select between Send a message, Schedule an appointment, or Get a callback.

To ensure that you'll be assisted immediately, I recommend checking our support hours before performing the steps.

I'm also adding this article about filing VAT return and recording tax payment: File your VAT return and record tax payments in QuickBooks Online.

Let me know if you have questions about taxes. I'm always here to help. Have a great day.