Incorrect VAT rate calculated on sales invoice

Hi beatrice4, thanks for joining us here on the Community :)

Do you have FRS enabled within QuickBooks and does the industry flat rate percentage show correctly when going to Taxes > Edit VAT > Edit settings?

Can we also check if you're using the Standard 20% code on sales and purchase forms, rather than a custom VAT code? 

Thanks for your quick reply.

What is FRS?

Yes the percentage shows correctly as 23% everywhere.

We are in Ireland - VAT was 21% and changed to 23% on March 1.

Hi @beatrice4,

Thank you for posting here in the Community. I can share some information about your VAT concern in QuickBooks Online.

The Flat Rate Scheme (FRS) is a method to submit a VAT return for small businesses. It's an alternative way to work out how much VAT to pay to HMRC each quarter.

With this scheme, businesses keep the difference between the amount of VAT paid to HMRC and the VAT amount paid by customers. The actual percentage you use depends on your business.

For more information, as well as how to join the scheme, I recommend the following article: QuickBooks Online Flat Rate Scheme explained.

Feel free to hit that Reply button if you have additional questions about how VAT works in QuickBooks. Have a great day ahead.

Thanks for your reply. Again, we are in the Republic of Ireland and do not deal with HMRC. There is no flat rate scheme here.

My aquestion is why does QB calculate a different VAT rate from the one that has been set?

Hia  

Im on flat rate VAT, Im on a 8.5% tariff which I have set correctly. But my VAT due on sales in more than 8.5% of of my total VAT collected. Unsure why this is. All my invoices seem to be in order and I thought my VAT due amount should be simply  calculate for me from my VAT collected on sales 

Thank in advance Tom  

Thanks for joining the thread, @tj construction. I'll share some details about your concern.

The Flat Rate Scheme (FRS) is a way for small enterprises to file a VAT return. It's a different technique of calculating how much VAT to pay to HMRC each quarter.

Businesses keep the difference between the amount of VAT paid to HMRC and the amount of VAT paid by customers under this arrangement. The percentage you use is determined by the nature of your business.

To learn more about Flat Rate Scheme in QuickBooks Online (QBO), you can refer to this article.

Resources, video lessons, and ideas for managing your corporate files can be found on our Community Help Articles page. Please visit the website if you require additional information.

Post here again if have other QuickBooks-related queries. I'll be more than happy to provide assistance. Keep safe and enjoy the rest of the week!

Hello. I am about to submit my latest VAT return and was surprised by the amount QB suggested I should pay, given my sales in the last quarter.

I think there is an error in the QB system. I'm using an FRS rate of 14% and QB appears to be calculating the 14% on the entire invoice value, including the VAT. I have attached a sample entry to show this problem. The invoice value is £250 so the 14% FRS VAT payable on this should be £35. However, QB has calculated this as £42 because the whole invoice amount (£250 + £50 VAT) has been used for the calculation. QB is effectively saying I need to pay VAT on my VAT. 

If I am correct, this needs fixing urgently! Thanks, Chris

Hi Chris, thanks for joining this thread - are you using the default standard 20% S VAT code on all invoices, or have you created a custom code for this? -Georgia

Hi Chris, I’m also seeing this problem and wondering how you solved it?