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Flat rate scheme VAT

I am new to QB and am using the online version and want to set up my 12% Flat rate for VAT. Can anyone tell me where I can find step by step help to do this?

 

Thanks

 

Simon

Solved
Best answer 10-18-2018

Accepted Solutions
QuickBooks Team

Re: Flat rate scheme VAT

Hi Simon,

 

Click onto Taxes on the left hand side of the screen

 

If you've not set up VAT already there'll be a button to set up VAT, when filling in the information tick the box for Flat Rate VAT and put 12% in the box.

 

If you've already set up VAT, but not FRS, then just click on Edit VAT - Edit Settings and then tick the box for Flat Rate VAT and put 12% in with the date FRS was effective from.

 

Follow this for more info: - https://community.intuit.com/articles/1169301-set-up-and-edit-vat-settings-vat-codes-and-vat-rates-u...

 

Thanks,

 

QuickBooks Team

Re: Flat rate scheme VAT


Hi Simon,

 

On that you'll have to speak to HMRC or an Accountant, as i can't tell you which VAT code to use for any specific type of transaction.

 

This is a community page, so other business owners, and accountancy qualified users may post their advice on this article.

 

Thanks,

9 REPLIES 9
QuickBooks Team

Re: Flat rate scheme VAT

Hi Simon,

 

Click onto Taxes on the left hand side of the screen

 

If you've not set up VAT already there'll be a button to set up VAT, when filling in the information tick the box for Flat Rate VAT and put 12% in the box.

 

If you've already set up VAT, but not FRS, then just click on Edit VAT - Edit Settings and then tick the box for Flat Rate VAT and put 12% in with the date FRS was effective from.

 

Follow this for more info: - https://community.intuit.com/articles/1169301-set-up-and-edit-vat-settings-vat-codes-and-vat-rates-u...

 

Thanks,

 

Not applicable

Re: Flat rate scheme VAT

Thanks James. I have one other question on VAT.

 

I have sales to the USA and purchases from the USA too. What are the best VAT codes to use for these as neither have VAT amounts.

 

Simon

QuickBooks Team

Re: Flat rate scheme VAT


Hi Simon,

 

On that you'll have to speak to HMRC or an Accountant, as i can't tell you which VAT code to use for any specific type of transaction.

 

This is a community page, so other business owners, and accountancy qualified users may post their advice on this article.

 

Thanks,

Not applicable

Re: Flat rate scheme VAT

There is an important bit missing here and that is the VAT return may be correct but the bookkeeping entries are wrong. For sales you need to define a new tax rate in the VAT menu e.g. 13% FRS and make this the default for all sales accounts. For purchases you need to make sure this is always defaulting to exempt or 'No VAT'. I am not sure whether, under MTD, HMRC are interested in seeing your purchases come through if you are on the flat rate scheme.

QuickBooks Team

Re: Flat rate scheme VAT


Hello Brignac45,

 

For FRS to work correctly on QuickBooks, you need to set your rate up under VAT settings after selecting the FRS option, and then use the 20% S code on VAT transactions - it will then work out the VAT due based on the rate entered. It will not work if you use a custom tax code.

 

Thanks,

 

Talia

Not applicable

Re: Flat rate scheme VAT

Thanks Talia,

 

I realise that now, it appears under 'Box 2 VAT due on acquisitions from other EC'. I feel this is something Quickbooks should fix if you want the double entry to be correct. If you use 20% you get 20% credit applied to VAT control and 20% debit to Sales account. This is obviously wrong and I am surprised this issue hasn't been raised previously.

 

QuickBooks Team

Re: Flat rate scheme VAT

Hi Brignac45,

 

When you "Mark as filed" on QuickBooks, it's at that point that the calculations are done, and the vat control account will have a journal posted to it. As Talia mentioned, Custom codes won't work.

The double entry on the transaction is correct, for the way quick-books wants to work it's Flat rate. Effectively, until Filing; the full value of the VAT is recorded, and shown in reports, journals and transactions. When you mark as filed, the "FRS" calculation is done, and the amounts of VAT is journalled from the VAT control account to the VAT suspense account, with any amount left over as the % saved(or lost) through FRS being posted to a profit and loss posting account which shows as either income to the business, or a loss to the business on the P + L.

 

The key to remember, is you have to have the period marked as filed, otherwise the reports won't make as much sense as you'd expect them too. If you create a custom code, the system just can't read the custom code like it can the standard codes.

Not applicable

Re: Flat rate scheme VAT

Hi James C,

 

Thanks for the reply. I get what you are saying and is this information available anywhere to Quickbooks users? I can imagine a lot of head scratching around the country. One thing that is not completely clear from your explanation is you say on filing the VAT return that the 'FRS' calculation is done and VAT is journalled from VAT control to VAT suspense account and benefit/loss from FRS posted to a profit and loss posting account. Is this account defined already or will it just appear when the return is filed? What you are saying does not correct the problem of incorrect postings. What you are effectively saying is that your net of VAT sales figure will always be wrong and you have just got to live with it. Also, if you have used a 20% VAT code on purchases then this won't be fixed either as that VAT will end up going to the posting account and not back to the purchase account. 

QuickBooks Team

Re: Flat rate scheme VAT

Hello Brignac45,

 

Thank you for posting here in the Community. I'm here to help share additional information about your concern with VAT in QuickBooks Online.

 

If you want to learn more about how VAT works in the system and the filing as well, I recommend visiting the article I found helpful below:

 

VAT: Getting Started.

 

Since the process for the Flat Rate Scheme is different from the Standard VAT, I also suggest the following link as it's a hub of articles to assist you with the method:

 

Keep in touch with me here should you have any additional questions or concerns regarding the Flat Rate Scheme. The Community will always be around to help out.