I am on the Flat Rate VAT scheme. I have posted expenses net, showing VAT (as advised). After filing the VAT return, my P&L still shows net expenses, mistating them

I'm happy to see you here in the Community, @DdB2.

To verify why your expenses are showing incorrect after filing the VAT return, I recommend contacting our Customer Care Team. They have necessary tools like the remote viewing session that can help review your transactions, determine the root cause of the issue.

To reach them:

1. Click on Help at the top menu bar.
2. Hit on the Contact Us button.
3. Enter a brief description of the issue in the What can we help you with? box.
4. Press on Let's talk.
5. Select on Get a callback.
6. Key in your contact details, then tap on Confirm my call.

Just leave a reply below if you have any other concerns. I'll be around to help you out. Have a good one!

Hi, thank you for your response.  I am travelling and constantly in meetings so its difficult for me to do this.

Is it not possible to suggest some potential solutions?

Thanks for coming back, DdB2.

The Flat Rate Scheme only takes effect on the transactions and in the reporting when preparing return in the Taxes tab. Other reports aside the Prepare return will use the standard 20% calculation.

Also, the Profit and Loss report only captures the Gross amount of each transaction. With that said, the Vat amount on each transaction will not reflect on the report.

To learn more about how the Flat Rate Scheme, please refer to these articles:

• UK Flat Rate Scheme: How does it work?
• About Flat Rate Scheme

Since we're unable to pull up your account here in the Community space for the security of your account, I'd suggest contacting our Customer Support Team. They'll pull up your account in a secure environment and help you review the expenses in the report. Just follow the steps provided by my colleague above.

Please loop me in if you need a hand filing your VAT returns. I'm determined to ensure your success.

Hi, thank you for the input.  I have followed the steps, set up the FRS as my operative VAT tax and filed my returns using the Taxes Tab.  My P&L is still showing the net amounts.

Hi DdB2,

The P&L is showing correctly as P&L does not include VAT, it will show the net amount not the gross as vat is money that is owed to HMRC, so it is a liability, it is not income or expense.

Ashley - this is FRS.  The revenue amounts show the correct amount amount going to HMRC.  But the expennditure should be gross (it will never be recovered from HMRC) and its not.

I have this issue too.

the reports should show expenses gross for the FRS even if there was VAT on the invoices as you dont recover the VAT on expenses unless they are over £2000. 

Is there a help desk operative that understand the accounting for FRS that can advise what to do?

I didnt want to mark all expenses as "no VAT" as i wanted to keep track of it all. 

thanks

Hi DdB2

The reports will always show as a net figure. If you would like to speak to an agent then you can contact the telephone support line: 08082345337

Hi Nikki11

With expenses for FRS you will enter them in the normal manner with 20%, if necessary. You will not be claiming these expenses back, usually unless it is capital expenditure over 2000, therefore the system will reflect this in the gain or loss.

but this is the issue, 

I enter the expenses with 20% VAT the Net shows in theP&L which is incorrect if we arent claiming the VAT back from HMRC. 

I am an accountant and I know that I am trying to do with this and I just dont understand why QBO isnt able to put the gross expense in the P&L if we are FRS

im now going to have to go back and change all the expenses to No Vat so that the accounts are correct. 

Hi Nikki11

We appreciate your frustrations however the reports always show the net figures. We do not recommend, however it s entirely your choice, that you enter the expense transactions with No VAT as the system will calculate the gain or loss by FRS. The more expenses you enter, including the correct tax code, the higher the value of the loss by FRS.

Nikki, I feel your pain!

I could find no resolution so in the end I cancelled QB and am heading off to one of their competitors.

I may not have a technical solution on how you go about dealing with FRS in QBs now, but here is what I did before MTD with "paper filing" online, and my understanding of VAT Flat Rate Scheme.

FRS is meant to simplify VAT Accounting for small businesses that qualify and opted in; however the Financial Accounting should proceed as normal under Standard VAT scheme in compliance with accounting conventions and policies of stating turnover and costs net of VAT. The VAT savings (or additional VAT) from each VAT period is worked out by comparing what you would have paid under Standard VAT accounting and FRS, and credited (or debited if negative savings) to P&L, normally in turnover/sales, as it is the heading that has the biggest share in the make up of VAT entries.

To dramatise the above and translates into accounting transactions, imagine filing VAT under standard scheme, paid the VAT due, but immediately being handed back a certain sum of money from HMRC because you have FRS opted in. On QBs (desktop versions when I did have jobs with FRS), I literally went through the process of filing the VAT on "paper" and posting the full VAT payment to bank, followed by a bank deposit to sales for the amount of VAT saved. This of course was only done after I reverted to pen and paper to work out the actual figures to be filed on HMRC online and paid the correct amount under FRS, thereby allowing me work out the tax savings.

It also makes sense that you should monitor if FRS is actually saving you money, and exactly how much, and take action to leave the scheme if it's no longer beneficial. The only way you can do that is to continue keeping the books as normal under standard VAT scheme right up to the "File VAT Return" stage. I guess under MTD, just need to figure out how to fudge the VAT summary figures for actual filing and post the VAT savings to a relevant P&L account.

Hope the above helps.

You don't claim expenses on FRS unless over £2000. If you'r needing to claim VAT on your expense you will need to select vat reclaimable on the expense. (Small tick box near vat amount) The vat reclaimable box will not show if no vat is selected in the amounts are. Thanks

Hi, Did you ever solve this issue?  I am also having the same issue that the P and L is not accurate if using the flat rate scheme.  Therefore I am exporting data to excel, then amending it with VAT amounts and taking off what I owe the HMRC to get a true picture from the P and L.  This is lots of extra work and not what I had in mind when I signed up to QB online.  I thought it was supposed to make things simple.  Not many people seem to understand the issue because I guess FRS is not so common.  Id love to know if you found any answers. Many Thanks.

“We appreciate your frustrations however the reports always show the net figures”

If the reports always show the net figures, when I’m preparing my accounts for my income tax, the expenses will be incorrect on my P/L that I will be submitting to HMRC (they would be less then I actually paid because I’m not claiming back the VAT due to me being on the FRS)

Does anyone have a solution for this? Without being able to run accurate reports for my income tax, QB would be unusable 

I'm here to help ensure your Profit & Loss (P&L) report will show the correct income tax, JR88.

You need to use the standard VAT codes on the actual transactions even though you've set up the Flat Rate Scheme (FRS). 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 %.

You also need to consider looking at the accounting method of the report. The FRS accrual and cash method will show different amounts

Here's a link for further explanation about this: QuickBooks Online Flat Rate Scheme explained. 

Don't hesitate to post again if you have follow-up questions about the income tax reported on the P&L report.

If i need a P/L report to show my expenses including Vat. how do i do that?

Everyone who uses the FRS cannot claim VAT back, so when we submit our income statement for our income taxes (not Vat return) every year we need the expense figures including Vat 

Hello there, @JR88.

My colleague has already answered a similar question you've posted. You can refer to this link if you haven't checked it yet: https://quickbooks.intuit.com/learn-support/en-uk/banking/re-ask-your-quickbooks-question-drop-in-se....

I'd also encourage checking our Help articles page to learn some tips and tricks in managing your QBO account. From there, you can read great articles that can guide you through the steps by steps process.

Please let me know if you have any additional concerns with QuickBooks. We're always here to help.

Hi Would i be correct in thinking that after correctly categorising the expenses with the 20% VAT ect, quicbooks with automatically calculate the Flat rate benefit and post this to the P&L therefore the figures in the P&L will be correct?  

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@MaryLandT wrote:

I'm here to help ensure your Profit & Loss (P&L) report will show the correct income tax, JR88.

 

You need to use the standard VAT codes on the actual transactions even though you've set up the Flat Rate Scheme (FRS). 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 %.

 

You also need to consider looking at the accounting method of the report. The FRS accrual and cash method will show different amounts

 

Here's a link for further explanation about this: QuickBooks Online Flat Rate Scheme explained. 

 

Don't hesitate to post again if you have follow-up questions about the income tax reported on the P&L report.

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Hi Bradley07, thanks for joining this thread - the figures will only change in the vat return to be your specific FRS percentage, whereas the PL report will show the net value of the expense transaction.