[UK] Prepare your VAT return
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[UK] Prepare your VAT return
This article reviews how to prepare to file VAT, how to make necessary adjustments, and how to run the reports that you will use in your bridging software.
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The explanations and advice i...
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Hi,
When I export my VAT100.csv file I have additional £ symbols in each of my boxes, which I have to manually delete. Can this be rectified?
Hey @Ubergeeksov . This is a known problem that was see from time to time. Currently, the best way to handle it would be to import your file into another program, like Numbers or Google Sheets for example, and export it again from there. This should solve your problem with the additional symbols.
Hey @Jarman, thank you for reaching out and that is a great suggestion. That feature does not currently exist and is not on our immediate roadmap, but I have passed your feedback along to our product team!
Works OK, except for one major error, I think. As per https://www.gov.uk/guidance/how-to-fill-in-and-submit-your-vat-return-vat-notice-70012#para46 Box 6 should include 'reverse charge transactions' (https://www.gov.uk/guidance/how-to-fill-in-and-submit-your-vat-return-vat-notice-70012#para37), that is value of all purchased services from other EC countries to match the ECS output tax included in Box 1, but in my case while Boxes 1 and 2 are filled correctly, box 6 does not contain any value of the reverse charge transactions on services.
Hello @Max_FP,
I believe your question relates to purchases from other EU states.
Can you please confirm if you have coded these purchases with an 'ECG' or 'ECS' VAT code, as detailed in the instructions to set up Wave for VAT and instructions how track VAT on Sales and Purchases?
If so, Wave should automatically record the net value of your purchases; you will need to apply the reverse charge of VAT by means of journal transactions, as detailed in instructions how to prepare your UK tax return.
Please note that the net amount of purchases from other EU member states is recorded in Box 9 and also Box 7. The 'reverse charge' transactions to enter in Box 6 refers to domestic reverse charge arrangements.
If you feel you have completed your records in line with the articles referenced above and are not seeing your relevant EC purchases reflected in Box 7 and 9, please reach out to our Support Team and we can look deeper.
Thanks, Paul.
hi there thanks for this article - i am new to WAVE it looks really good .... I am on flat rate VAT so do i need to do anything different as otherwise the report will always show that own more VAT than ive paid
Hey @Caz488. So in this situation, it's a little bit more complicated. Currently, you should be using the standard sales tax collected on your transactions (20%) but you can confirm whether or not this is the case at the moment. Let's also pretend that the flat rate is 14%.
For example, if you had a sale worth £100 and the VAT was at 20%, £20 would go to line 1 on the VAT report. In this situation, you would want to make sure you are reflecting the correct flat rate in Wave after this value has already been accounted for (in the VAT report). In doing this, you will first need to create a Chart of Account (something like, Flat Rate Benefit) as either an income account (to show the value that you've made on the difference or expense account (to show the decrease in what you actually owe [for this, you will want to seek the advice of a tax professional]). I'm going to use the income example, so let's say you have the income account setup for Flat Rate Benefit. In order to show that the £20 was originally listed in the transaction, but then also adjusted to show the flat rate amount, you will want to create a Journal Transaction. In this Journal Transaction you will want to start by debiting the sales tax liability account (£20 to remove the amount from the VAT report) - It should look something like this:
The next two parts of the Journal Transaction would be crediting that same sales tax liability account (with £14 to show the actual amount on line 1 within the VAT report). Finally, the 3rd line would be you crediting the income account that you created (so the Flat Rate Benefit account with £6). I truly hope I'm making sense here, but I'm happy to go into further detail if needed. One thing to also mention: That 14% amount is given by the HMRC, but you won’t be putting in the percentage amount into the Journal Transaction - you’ll need whatever 14% of your total sales is and you'll need to do this calculation on your own outside of Wave.
The VAT100 Report does not correctly calculate Box 6 -Total value of sales and all other outputs excluding any VAT. In case of purchasing services from EU countries box 6 should include value of the deemed supply but currently it does not. Please refer https://www.gov.uk/guidance/how-to-fill-in-and-submit-your-vat-return-vat-notice-70012#para46
I just wanted to report this problem as well and to ask the Wave devs to fix this since it's an error. The article by Paul Clark should be updated as well to clarify -- specifically, it depends whether you buy goods or services from the EU (it further depends on the place of supply but for simplicity, we can assume the "general rule" applies and hence reverse charge applies). Assuming the popular Standard VAT scheme (note that this doesn't apply to special VAT accounting schemes) then concretely:
When purchasing EU services, boxes 1,4,6,7 need to be populated (boxes 3, 5 are automatic).
When purchasing EU goods, boxes 2,4,7,9 need to be populated (boxes 3, 5 are automatic).
Reverse charge applies in both cases, but is reported differently. Good short summary here: https://www.crowe.com/uk/croweuk/insights/completing-a-vat-return-guidance-for-businesses-that-trade-worldwide
More than you want to know (pay attention to the paragraphs on "Filling in box (2,4,7,9)" regarding EU goods)
here https://www.gov.uk/guidance/how-to-fill-in-and-submit-your-vat-return-vat-notice-70012#section3
and here (for services) https://www.gov.uk/guidance/vat-imports-acquisitions-and-purchases-from-abroad#services-received-from-overseas-suppliers
The link posted by @Ove shows a misleading table -- that table doesn't apply to the standard VAT scheme (it applies if you use a special VAT accounting scheme, see full Section 4 in that document, note how Gold is treated like a service in that table). Purchasing EU goods under the standard VAT scheme is reported in boxes 2,4,7,9, and not in boxes 1,4,6,7.
Hi,
Our business is on the Flat Rate Scheme at 6.5%. We purchase goods and services from other businesses in the EU and they provide us invoices with 0% VAT. Thus, we have to account for the reverse charge but we cannot reclaim it. So, it's only a one-sided transaction. How do we account for that in Wave?
Thanks, Marius
Hello, I’m new here so apologies if this isn’t the forum to ask this question!!!!
I’ve tried to create a Vat100 report but line 7 for purchases is reading as zero ? I’m not reclaiming Vat as this is my first Vat return and I’m a sole trader. Should the Vat 100 report show sales and purchases ? Any help would be grateful
Hey @Covpabs
I have a feeling the issue might be that you didn't select the recoverable sales tax setting when creating your VAT.
Can you check under Settings > Sales Taxes > Then edit the tax to see if it's set as recoverable?
You won't be able to uncheck this once the tax has been created, so you will need to create a new VAT that is recoverable and bulk reassign your transactions to that new VAT tax.
You can select the check boxes beside all of your transactions and bulk add the new VAT recoverable sales tax.
If you use your filter tab on the transactions page, this can be quick and painless!
@Barsin thank you. All sorts now. I hadn’t created any tax, thanks for your help