I have just started using quickbooks and I am a little unsure of how it deals with FRS vat. I am using a flat rate of 11%, from what I have read, I should be charging 11% vat on sales and inputing 20% vat on purchases, where applicable.
When looking at various reports it looks like the system is using thoses percentages to work out my vat liability rather then using the FRS.
Does anyone know how this works in quickbooks?
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Thanks for joining our Community.
I can help you here.
Once you have set up your VAT within QuickBooks Online and selected the FRS system for VAT, you would use the standard VAT codes as though you were on the standard VAT scheme, and only when you actually prepare your return would the 11% FRS rate be applied and the savings calculated.
To give you some help with this as you get started, you can take a look at our Community article that we have prepared to help our customers with FRS and how it works within QuickBooks Online.
Let me know if you have any further queries.
Thanks for that! Let me just check I understand...On sales and expenses I should be including 20% standard rate VAT and the system will work it out according to my FRS %.
Is that correct?
If so, I have a lot of editing to do!
I find this quite ridiculous.
Why can't quick books prepare my reports as if I was on the flat rate scheme ongoing.
The P&L is totally useless to me as it shows all figures as if I was on standard rate.
It's ok saying my return to the revenue will be fine, but ongoing I expect a package to be able to keep a track of my finances for the scheme I am on.
If anyone can further advise I would appreciate it as I purchased this on the understanding it was compliant with the flat rate scheme. From my standpoint it seems to only be working for the final vat report but wont give accurate P&L and Balance sheet info, which is pointless.
I appreciate the points you're making, KevinWhibley.
If I were in your position, I might have the same concerns.
In QuickBooks Online, the reports will always show the 20% calculation. Though, when you submit your actual VAT return, our system will automatically use the flat rate.
For now, we're unable to pull up any reports that will base on the flat rate scheme.
If you have more questions, you can always leave a comment.
Surely on the Flat Rate Scheme you don`t need to use the VAT rate on purchases as you don`t claim it back?
Only on large purchases over £2000.
On VAT Notice 733.
7.8 How do I prepare business accounts for Income Tax purposes while I am using the Flat Rate Scheme?
It is expected that accounts for businesses who are using the scheme will be prepared using gross receipts, less the flat rate VAT percentage, for turnover and that expenses will include the irrecoverable input VAT.
For both VAT and Income Tax purposes, there is a requirement to keep a record of sales and purchases. But, for businesses using the scheme, that record does not have to analyse gross, VAT and net separately. The records need only be complete, orderly and easy to follow.
My credit card transactions are not loaded to QB. I just record the payments as cheques. This is where most of my expenditure is. The whole point of FRS is that you do not need to keep track of your expenses; only VAT charged on sales. So how do I now calculate and make my next VAT return? Incidentally I was perfectly happy with QB Desktop (I have very few transactions per annum) and only upgraded because of MTD!!
Why can't QB just run a report on sales, apply a Flat Rate Percentage and return? Job done!!
Hello there, Nick.
In QuickBooks Online, the reports will always show the 20% calculation. For now, we're unable to pull up any reports that will base on the flat rate scheme. However, when you open your actual VAT return, our system will automatically use the flat rate.
Currently, we're unable to support the online submission of the FRS return. You'll have to manually submit it through the HMRC website, then manually mark the VAT as filed in QuickBooks. Check this article for more information: Submit a VAT return in QuickBooks.
I’ll pass along what you’ve said onto our management team. They will submit it to our developers for review.
If ever you have other concerns, don't hesitate to post in the Community.
Hi there, I have just logged into my quickbooks online account (and I use the Flat Rate Scheme) and as I thought it was updated recently to enable me to submit directly to HMRC.
Is this not the case now?
We are not able to submit the online submission of FRS; as that connection and the terms of the connection have not yet been finalised with HMRC.
As soon as we are able to submit FRS through MTD, we will be releasing this information and functionality to our customers.
In the March quickbooks MTD news letter it said
”Flat Rate Scheme now supported
If you're on a flat rate scheme you can submit your VAT return through QuickBooks”
And my VAT page now has a Submit to HMRC button?
Thank you for posting here in the Community. Allow me to step in and help you with any questions you may have with the Flat Rate Scheme in QuickBooks Online.
Small businesses who are eligible for Making Tax Digital (MTD) can submit a VAT return to HMRC. The newsletter you're seeing is only referring to those who signed up for MTD only.
For Flat Rate Scheme (FRS) or if you submit your VAT annually, online submission to HMRC is currently unavailable through QuickBooks. For additional insight and steps that you need to do with the VAT return, I'm adding an article that I recommend:
Please feel free to follow up with me here for all of your needs concerning FRS. I value your time and service.
Thank you for replying but that has totally confused me.
I am signed up for MTD with HMRC, I am on the Flat Rate Scheme, my quickbooks online is all configured for the Flat Rate Scheme and I have a submit to HMRC button (only added in the last month). ( My gross earnings are over the £85000 threshold )
Can I send my VAT return to HMRC digitally as I have too.
If not please explain how I can.
Hi there, quirkygirlworkshop.
I got an update for you.
Yes, you can send your VAT Return to HMRC through QuickBooks even if you're on a Flat Rate Scheme. But first, you have to authorise QuickBooks to interact with HMRC.
I got articles with screenshots to guide you through the process:
If you have other questions, please let us know.
I did this but when trying to submit my VAT return it appears to have added 20% onto my sales for Q4 and then taken the 7.5% putting my VAT bill up by about a third?
Hi there, not sure how long you have been using the Flat Rate Scheme.
I have only been on it since Nov. 2018 and it took me a little while to get all the info needed.
The 7.5% is multiplied by the Gross takings ( including the 20% VAT ). This is what you pay in VAT.
Then when you do your Income tax return you take the 7.5% VAT you paid off of the gross (including the 20%), then take off expenses (including VAT).
Hope this makes sense.
Thanks for replying but Ive been on FRS for since 2005. It is the QB calculation that is wrong. Been talking with them for over 4 hours this morning and it is still not resolved!
No problem. Did they say that it is a quickbooks software error that will effect everybody on the flat rate scheme ( I will be doing my filing in May) or something specific to your accounts?
Hi all, been reading through all your messages.
My problem is that I'm on a FRS at 8% I can see my sales for April but QB is calculating 8% of a lower amount.
I have a feeling when I set up VAT I was asked something about net or gross and I wonder if I set it up wrong but cannot work out how to get back to the set up.
Is this a similar problem to what you are having?