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Level 1

VAT Adjustments for prior quarters on the Fixed-Rate Scheme

We will submit our fourth quarter return under the flat rate VAT scheme at the end of this month.  To date this year (Q's 1-3), I have paid HMRC VAT at the 14% rate for Management Consultancies.

 

However I now realise we should have classed ourselves as a ‘limited cost business’, which means we should have been paying 15.5% (16.5%, less our 1% discount) for our first 12 months on the Fixed-Rate scheme.

 

The VAT collected in Q4  amounts to £4,396.11 at 15.5%. I have changed the rate for my next return so that Q4 figure is  correct. However I now need to make an adjustment to the same return to allow for the underpayments in VAT for the prior three quarters.

 

On the basis of my calculations the underpayments work out at:

 

  • £262.94 for Q1
  • £507.99 for Q2
  • £489.60 for Q3
  • Total: £1,260.53 for Q1-3

I will then need to deduct £135.72 in  unclaimed fixed asset expenditure resulting in a total adjustment of £1,124.81

 

I have attempted to make the necessary adjustments in QuickBooks several times without success. I am clearly doing something very wrong.  Can anyone advise me how I should sort this out?

1 REPLY 1
QuickBooks Team

VAT Adjustments for prior quarters on the Fixed-Rate Scheme

Hello AdrainSnook, 

 

Welcome to the Community page, 

 

We would advise that you seek advice from a vat accountant they will be able to help and guide you through it as we are not trained accountants just technical support. 

 

Essentially what you would do is add 4/4.5% onto those three totals. to make it 20% then the vat return takes if off again at the rate set in the vat settings. 

 

But like I say we would advise you to speak to an accountant about it.