VAT Configuration

The VAT settings for the organisation can be managed from this screen. Care should be taken to ensure that the settings are correct for the organisation and if settings are changed you should carefully check you next VAT return and seek professional advice if you are unsure of the implications of the changes you have made.

Some more background to VAT and VAT configuration is available from VAT - Setting up and Configuration

VAT is recorded and stored at the point of a transaction being entered, see VAT - Recording of VAT for more.

VAT Number

Enter the VAT number as provided by HMRC when you registered for VAT. Spaces or dashes will be removed as they cause VAT numbers to mismatch when using online filing. This field is required if you are tracking VAT.

if you do not have your vat number and want to track vat use 'unknown'.

The number entered is checked by the system against the HMRC VAT number validation algorithm.

If you are trading with VAT registered Customers in EU member states optionally enter the applicable alphabetical code for the UK (GB) as this must appear on the sales invoice as part of your VAT number.

Registration Date

Enter the date from which VAT registration is effective. If you enter a date in the future the VAT versions of the transaction will be presented to users of the company from the date entered. This date is required if you select the track VAT option.

It is very important that this date is entered correctly.

If you are on the flat rate VAT scheme this date is used to decide whether the discounted flat rate should apply to an invoice or credit note.

If you are on the flat rate VAT scheme, when the value in this field is changed, flat rate adjustment postings may be updated if the transaction has not been included in a vat return and the change impacts whether or not the discounted flat rate should apply.

Final Return (De-registration) Date

Only enter a date when de-registration from VAT has been confirmed by HMRC and the date notified to you.

It is very important that this date is entered correctly.

The final VAT 100 return will only report those VAT transactions from the beginning of the current VAT period up to and including this date.

Use Online VAT Filing?

Check this box if you wish to use Liberty Accounts online VAT filing facilities for VAT100 and EC Sales List declarations.

Note that you need to register with the Government Gateway before you can make a successful online submission.

Auto-post Direct Debit Account

Online VAT filing normally requires payment by Direct Debit.

If a bank account is selected Liberty will post the direct debit to the account when it processes a success response from the Government Gateway.

For payments the Gateway response includes a collection date. Repayment responses do not include a date for the repayment so liberty will make a posting dated 10 days after the processing of the Gateway response.

VAT Scheme

Choose either the Standard Scheme, or the Cash Accounting Scheme. For the standard scheme VAT is accounted at the tax point date shown on invoices raised or received. The Cash Accounting Scheme allows you to account for VAT on the basis of cash amounts actually received or paid out. Certain conditions must be fulfilled before you can use the cash accounting scheme, please check with your accountant before selecting this option.

VAT Periods

This field is required if VAT registered. Select the period when VAT reporting begins. The quarterly system is the usual reporting period. However you may elect for monthly (most usual if you are in net receipt from HMRC. If you have been registered for VAT for at least 12 months and the annual value of your taxable supplies (VAT excluded) is below £1.35 million, you may be able to use the annual accounting scheme. If approved you submit one VAT return per year rather than four. You will be required to make interim payments during the year and a balancing payment with your annual return. Liberty Accounts will provide the annual return and the interim payments can be set using the memorised payments system.

Next VAT Period End Date

Enter the date manually (e.g 19/12/2015) or click on calendar icon to select date from the calendar. This is required.

When entering dates manually, a date guessing routine speeds up the input by taking the user input and assuming the missing month and or year based on the current date as the user leaves the field i.e. the date today is 30th October 2015

Banding Scheme for Churches/Cathedrals

Available in not-for-profit configuration only, those churches/cathedrals who have agreed the adoption of the Banding Scheme with HMRC (reference HMRC Banding Scheme) should confirm their agreed band (A to D).

If a band is selected the system will add additional VAT Codes which should be selected on data input of expenses. The user can also adjust the default VAT Code on nominal accounts for those of the banding scheme that should be applied.

Flat Rate VAT

Select Flat rate VAT if you are on the HMRC Flat rate VAT scheme. A flat rate configuration screen becomes available once the configuration has been saved.

When this option is checked for a business the VAT rate for all purchase transactions will default to "Out of Scope" when the account is selected. The default value can always be overridden by the user at the time of entry.

When this option is checked for a business all invoices and credit notes will have a flat rate VAT adjustment posted if they fall within the dates when the scheme applies as defined on the start and end date of the flat rate scheme. The amount of the adjustment will depend on the flat rates defined, and the discounted rate may be applied to the adjustment if appropriate for the tax date of the transaction.

Flat Rate VAT Start Date

Enter the date from which you may start to use the HMRC Flat Rate VAT scheme.

It is very important that this date is entered correctly; it is used in conjunction with the VAT registration date field to decide whether the discounted flat rate or full flat rate should apply to a given transaction.

When the value in this field is changed, flat rate adjustment postings may be applied to, or removed from, existing transactions which have not been included in a VAT return.

Flat Rate VAT End Date

Enter the date from which you will cease to use the HMRC Flat Rate VAT scheme. This date is provided by HMRC when you apply to leave the scheme.

It is very important that this date is entered correctly.

When the value in this field is changed, flat rate adjustment postings may be applied to, or removed from, existing sales transactions which have not been included in a VAT return.

When the value in this field is changed, it is the user's responsibility to update VAT codes and amounts on any existing purchase transactions impacted by the date change. e.g. a purchase transaction for 1/6/2007 has been recorded as a flat rate purchase with the VAT rate "Out of Scope". If a flat rate end date of 31/5/2007 is entered, the above transaction should not be a flat rate "Out of Scope" transaction and the transaction must be updated by the user.

Flat Rate VAT Rate

Enter the standard flat rate percentage that you will be using on the HMRC Flat Rate VAT scheme. i.e. enter 12 if the rate applicable to your business is 12%.

It is very important that this value is entered correctly as it is used to calculate flat rate adjustments to your VAT liability for every Invoice and Credit Note you issue.

When the value in this field is changed, flat rate adjustment postings may be updated for existing transactions which have not been included in a VAT return.

Discounted Flat Rate VAT Rate

Enter the discounted flat rate percentage that applies during the 1st year after your VAT registration date. The discounted rate is normally 1% less than the standard rate. i.e. enter 11 if the discounted rate applicable to your business is 11%.

It is very important that this value is entered correctly as it is used to calculate flat rate adjustments to your VAT liability for every Invoice and Credit Note that you issue.

When the value in this field is changed, flat rate adjustment postings may be updated for existing transactions which have not been included in a VAT return.

ECSL - Ended 31/12/2020 except for Northern Ireland

If online filing has been selected (above) then ECSL filing may also be activated by selecting the filing cycle either monthly or quarterly.

Next ECSL Period End Date

Enter the date manually (e.g 19/12/2015) or click on calendar icon to select date from the calendar. This is required.

When entering dates manually, a date guessing routine speeds up the input by taking the user input and assuming the missing month and or year based on the current date as the user leaves the field i.e. the date today is 30th October 2015

VAT Postcode

If online filing for ECSL is being used the VAT postcode is required. This is the postcode that appeared on the registration documentation, or was subsequently formally amended with HMRC.

Note an incorrect postcode will cause a validation failure at the Government gateway.

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