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VAT not showing up in VAT report for a bill that is paid off in instalments
New user. I have just registered for VAT as of 1st Sept.
I have entered a bill dated 27/5/09 that is being paid off by direct debit over 12 months. I am on the cash based scheme.
I entered the bill as a VAT'able transaction and then allocated each monthly DD as a payment against that bill.
I expected that each DD would show up as an allowable VAT expense, but there is nothing in the VAT report.
I have entered a bill dated 27/5/09 that is being paid off by direct debit over 12 months. I am on the cash based scheme.
I entered the bill as a VAT'able transaction and then allocated each monthly DD as a payment against that bill.
I expected that each DD would show up as an allowable VAT expense, but there is nothing in the VAT report.
I’m frustrated
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Inappropriate?Hello Gareth,
With apologies that you have had to wait for this reply.
I would suspect that the reason why this is happening is that the bill was dated before you registered.
I do agree that it should pick up the VAT on the post-registration payments (and maybe also the pre-registration payments, see below) and this is something we will need to look at. However in the meantime, could I suggest that as a work around, you delete the bill and re-enter it divided into 12 monthly bills, each with a payment.
Then the system should pick up on the post-registration payments.
As for the pre-registration payments, if the bill is for goods or an asset that your business still has, or for services that your business received such as accountancy fees, then you can of course claim the VAT on those payments too, but I think you will need to adjust your VAT return manually for those at the moment.
Kind regards,
Emily -
Inappropriate?Thanks Emily
I'll implement the workaround for now, but I am now concerned that there may be other (funnies) in there as well.
I don't have the technical expertise to scrutinise the VAT report for every little thing it may have wrong and the last thing I want to do is submit an incorrect VAT return: the penalties are getting too steep these days.
I’m concerned
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Inappropriate?Hello Gareth,
I appreciate your concern. We do do our best to make sure the VAT returns produced in FreeAgent are correct but, as with any system, there is always the possibility of a problem cropping up, so I would advise you to check each VAT report carefully and if you do spot anything that you're worried about, ask your accountant or ask us for help.
I can also understand your worry about submitting an incorrect VAT return. However, HM Revenue specifically say on their website "People do make mistakes, and HMRC does not expect perfection". If you make a mistake after taking "reasonable care", then HMRC should not charge you any penalties.
And also, if an error occurs after taking reasonable care, then you can simply correct it on your next VAT return so long as it is no lower than the greater of £10,000, or 1% of the figure in box 6 of the VAT return for the quarter when you discover the error.
More information from HM Revenue at http://www.hmrc.gov.uk/vat/managing/p...
Kind regards,
Emily1 Comment
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This answers the question
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Inappropriate?Gareth,
Just following on from what Emily said:
We're rolling out some improvements to the accounting engine later on this week (or early next week at the latest), one of which is that pre-registration transactions are indeed included properly in that first VAT return.
If that's too late for you then, yes, I'm afraid an adjustment may be required. Either way, we're really happy to help out directly if you're OK with giving Emily access to your account by adding her as an accountant user...she could check things through...
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This answers the question
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It can wait until next month as the quarter closes at the end of October.
If the problem persists, then I'll revert about giving Emily access. Thanks for the offer.
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