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Not registered for VAT
I am using FreeAgent for my wife's accounts. She is not VAT registered and I accept that most users will be VAT registered.
It would make expense entry a lot easier if the options for VAT rates was disabled when the user entered the fact they were not registered.
It would make expense entry a lot easier if the options for VAT rates was disabled when the user entered the fact they were not registered.
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Inappropriate?Stuart, good point, and we don't display VAT rates on Invoice Items for that very reason.
With outgoings it's a bit trickier - we don't know if someone's about to be VAT registered, in which case they'll be able to reclaim some pre-registration VAT back. If there's no VAT information available it's a bit hard to work this out.
We try to make it straightforward with our 'Auto-VAT' setting, which chooses the vat rate base on the most likely one for the category of purchase.
Always glad to receive suggestions about streamlining this - for example we could assume the auto-vat rate is correct and not display it for non-registered businesses. When they actually registered, they may have to go back and check through the list to make sure it's accurate..
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Inappropriate?Accepted Ed but this is where the accountant in me comes out!
Given that a taxpayer must have a VAT invoice to reclaim VAT (including pre-registration VAT) and the rules are different for goods & services I would have thought it was easier to calculate the pre-registration VAT by examining the actual invoices for the previous six months which would allow you to disable the VAT choices in FreeAgent. The rules for goods cover the previous three years and are slightly different to the services rules but I would have thought the starting point in calculating pre-registration VAT was a review of what you actually owned rather than checking prior invoices. Once the "stock" (including capital items) had been listed it would be a matter of finding the invoices.
As always , I am very conscious of being an accountant and don't want to complicate the product by trying to make it suit everyone. Just tell me straight and I'll drop it - Dennis would!
I’m confident
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Inappropriate?It's not the invoices we're needing (remember - no Accounts Payable in FreeAgent!) - it's the outgoings.
Happy to be corrected on this, though.
I’m not an accountant. Can you tell?!
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Inappropriate?Stuart - there's something of a trade off here as I'm sure you'll agree. Going back is always going to involve manual steps that are probably best left to the professional to pore over the actual invoices.
I’m a retired accountant. Thank goodness!
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Inappropriate?Me again. Sorry. I'm now playing devil's advocate!
Dennis, can you imagine how many accountants (not me) when faced with an entry for VAT input tax will tell the client "It's wrong, you're not registered for VAT".
At best, they will post it somewhere, but they're more likely to analyse it in detail or at worst they'll insist the client stops doing it that way.
My final comment on this topic.
I’m a happy accountant
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Inappropriate?Yes I can imagine Stuart - which is why it's nice to have helpful people along who try and find sensible answers. ;)
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Inappropriate?Chaps, luckily FreeAgent knows enough about the VAT status at any point in time to know what to post gross, and what to post net plus to the VAT account. Even under the Flat Rate Scheme.
For users who don't understand what this 'posting' thing is about, don't worry - FreeAgent takes care of all of this behind the scenes.
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