VAT

Note: Changes made to this part of the application can signficantly affect your data. If you are unsure, please contact us or speak to your Accountant first.

AccountsPortal provides comprehensive treatment for countries using the Value Added Tax system (VAT). In some countries, eg Australia and New Zealand, value added tax is referred to as Goods and Services Tax (GST). For simplicity, the acronym VAT will be used throughout the AccountsPortal application.

A high degree of flexibility is provided in regard to VAT treatment and functionality. The system caters for Standard Rate and Flat Rate VAT (a simplified VAT scheme offered by countries such as the UK), as well as Accrual or Cash basis accounting.

When entering new transactions such as sales invoices or payments, the system will automatically determine the Organisation's VAT status (at the date of the transaction) and apply the correct accounting and VAT treatment.

Add or Edit VAT Status

To add a new VAT status, or edit an existing status, perform the following steps:

  • Click the Settings tab, and then VAT.
  • If you have previously entered a VAT status, then this will be shown in the list; otherwise the list will be empty.
  • To add a new VAT status, click the 'Add New VAT Status' button.
  • To edit an existing VAT status, click the relevant row from the displayed list.
  • From the resulting popup enter or amend the following information.  
    • Valid From Date: Enter the date upon which the VAT status became active.
    • VAT Scheme: Choose Standard rate or Flat rate from the drop down list. Alternatively, if you are deregistering from VAT, then you can choose Not Registered from the drop down list.
    • Flat Rate (%): If the Organisation is Flat rate registered, then a flat rate % will also be required. These are usually industry specific and can be found on your tax authoritie's website.
    • Accounting Basis: Choose Accrual Accounting or Cash Accounting from the drop down list. A simple explanation of the difference is that Accrual Accounting results in VAT being recognised based on the invoice or credit note date whereas Cash Accounting results in the VAT being recognised on the date that the invoices are paid or credit notes refunded.
    • Reporting Frequency: Choose Monthly, Quarterly or Yearly from the drop down list.
    • Memo: Enter any other optional information.
  • Click the Save button.

 

PLEASE READ CAREFULLY:

We highly recommend that you speak to your Accountant before editing an existing VAT status. If you know your VAT Status is going to change on a certain date, then you should create the new status well in advance of that date, and prior to entering new transactions.

If the Organisation is already VAT registered, and you are changing to a different VAT scheme or accounting basis, we advise where possible, that you arrange with the HMRC for the new status to be valid from the beginning of a new period/month. This will greatly reduce the complexity of checking the values of the VAT Report before and after the change of status.

If the VAT status for the Organisation has changed, then a New Vat Status should be entered and saved, rather than editing the existing status.

If a new VAT Status is created, any existing transactions with a transaction date on or after the 'Valid From Date' will need to be opened and resaved to pick up the new VAT Status. This step is extremely important as the VAT Status is set in the transaction and referenced during creation of the VAT Report. Alternatively, you can void/delete these existing transactions and re-enter them.

 

Delete VAT Status

Note: Changes made to this part of the application can signficantly affect your data. If you are unsure, speak to your Accountant first.

To delete an existing VAT status, perform the following steps:

  • Click the Settings tab, and then VAT.
  • From the displayed list, click the 'X' image on the right hand side of the relevant row.
  • Confirm the action.
  • Click the Save button.

 

VERY IMPORTANT NOTE

The deletion will only succeed if there are no existing transactions already saved with the VAT Status being deleted. You have two options if existing transactions were entered with an incorrect VAT Status:

1. Firstly, delete/void all the incorrectly entered transactions. Then change the VAT Status, or delete it and enter a new one. Lastly, re-enter the transactions.

2. Enter a new VAT Status with the correct settings and the same 'Valid From Date' as the existing incorrect record. You will only be able to do this if the date is not included in a saved VAT Report. Any existing transactions with a transaction date on or after the 'Valid From Date' will need to be opened and resaved to pick up the new VAT Status. This step is extremely important as the VAT Status is set in the transaction and referenced during creation of the VAT Report. Alternatively, you can void/delete these existing transactions and re-enter them.

Add or Edit VAT Rates

AccountsPortal automatically provides the necessary rates used in the UK. If your organisation is based in another country which uses VAT/GST, then you can edit the existing rates and/or create new rates. Typically you would add two entries for each percentage required. For example if you want to add in a 25% rate, you would normally create an entry for 25% with a Tax Type of 'Sales' (or 'Income') and and entry for 25% with a Tax Type of 'Purchases' (or 'Expenses').

Navigate to the Settings tab and then click VAT.

Click the Tax Rates button.

To add a new VAT rate, click the 'Add New Tax Rate' button.

To edit an existing VAT rate, click the relevant row from the displayed list. 

VAT Rates

  • Name: Description of the rate displayed during transaction entry. This description is also validated when using the Import Invoices and Credit Notes feature.
  • Tax Type: Select the appropriate type which best describes the new tax rate.
  • Tax Rate (%): Enter the appropriate rate as a number eg 25 

Note that you can delete rates as long as if they have not been used in any transactions.