AccountsPortal Blog

VAT Report enhanced to address Limited Cost Trader changes

Please note this only impacts UK users registered under the Flat Rate Scheme (FRS).

April 2017 is the first reporting month effected by the recent changes to the FRS scheme.

The VAT Report has been enhanced to warn users that they might need to calculate their VAT result with the Limited Cost Trader Rate of 16.5% instead of the industry rate they are registered under. There is a link to the HMRC calculator set up specifically to help you make the determination.

If necessary, users can select the option to recalculate the report using the 16.5% rate (or 15.5% rate if you are in your first year of registration).

Saving the report will generate a journal entry to adjust the VAT Control account and recognise the impact of reporting VAT for the period as a Limited Cost Trader.

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Custom email settings allow you to change the From Name and Email Address

By default all emails that you send from your organisation in AccountsPortal will use your profile name and login email address. However, if you have multiple users logged into a single organisation, you may find it preferable to have all emails originating from a single email address, irrespective of who is logged in.

If you want all emails from your organisation to come from a single From Name and Email Address, then our newly released Custom Email Settings are for you! You now have two options for outgoing email addresses - the logged in user's or a custom email address.

The logged in user (default email address setting)

  • The Reply to email address is the logged in user's login address.
  • The From name is the logged in user's profile name.

Custom email address

  • The Reply to email address is a custom email address for all emails sent by any user from your organisation.
  • The From name is the name you choose when you add your custom email address.

For more information, please read the Email Settings help document.

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UK VAT - Reminder of FRS changes effective 1 April 2017

UK users registered under the VAT Flat Rate Scheme (FRS) should be aware of the changes commencing 1 April 2017. For more information please read VAT Notice 733.

If you are certain you will be considered a Limited Cost Trader moving forward, then we recommend you create a new 16.5% Flat Rate Tax Status in your organisation's Settings prior to entering any invoices or bank transactions.

We will be enhancing the VAT Report in the next few weeks to assist with users that are 'periodically' Limited Cost Traders.

Are you leaving the FRS Scheme as a result of these changes?

Please pay particular attention to section 12 and 9.6 if you are leaving the FRS scheme as a result of these changes.

Set up a new Tax Status in the Settings of your organisation, and ensure that the Valid From Date is set to 01-04-2017. This must be done before before you enter any April transactions (even if you are deregistering from VAT entirely).

The system will calculate the correct values in your VAT report unless you are leaving the FRS 'cash basis' and do not plan on continuing under the Standard VAT cash accounting scheme. Under this specific scenario, you will need to enter payments against any outstanding invoices and credit notes to get them included in the VAT Report as per the section 9.6 requirements.

Replacement invoices and credit notes should be created with the Tax Treatment in the header set to 'No VAT/Out of Scope'. This will ensure that they are not included in any future VAT Reports but the Accounts Receivable ledger account and customer balances are set back to the correct amounts.

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Customer and Supplier Overpayments

Up until now, the approach for Customer and Supplier Overpayments was to enter separate bank transactions for the invoice amount and the overpayment amount. The overpayment amount was entered as a General Receipt or Payment against a nominal ledger account. This was not ideal because the amount didn't update the Accounts Receivable/Payable account or appear in the Ageing reports or Statements.

The release of the new overpayments functionality removes the manual steps and vastly improves the reporting gap. Overpayments is now done in a single step and is correctly reflected in all relevant customer/supplier reports. The feature can also be used for Advances and Deposits where VAT is not applicable.

Overpayments can now be entered as follows:

  • Directly in banking using the new 'Overpayment' transaction type
  • Automatically in banking when entering an 'Invoice Receipt/Payment' transaction type
  • Automatically in the invoice overview screen when allocating a payment

This release also includes the display of amounts available to credit against an invoice when viewing sales or purchase invoices. The credits can be allocated directly in the invoice view, greatly speeding up transaction entry.

For more information, please read the Overpayment from Customer or Overpayment to Supplier help documents.

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UK VAT Flat Rate Scheme (FRS) Changes from 1 April 2017

As part of the Autumn Statement released on 23rd November 2016, the Chancellor of the Exchequer announced that there would be changes to the VAT flat rate scheme (FRS) effective 1st April 2017. A policy paper was published on the 5th December 2016 to coincide with an 8 week consultation period whereby businesses would be given an opportunity to comment on the proposed changes.

The changes are being introduced to remove what the HRMC see as ‘unfair’ advantages that some small businesses enjoy when using the FRS.

The Proposed Change

Currently the flat rate percentage used by a business is determined by their trade sector. Going forward, however, HMRC intends to introduce a new cross-sector rate (set at 16.5%) for businesses deemed to have limited costs, otherwise known as ‘limited cost traders’.

A limited cost trader will be defined as one whose VAT inclusive expenditure on goods is either:

  • less than 2% of their VAT inclusive turnover in a prescribed accounting period; or

  • greater than 2% of their VAT inclusive turnover but less than £1000 per annum if the prescribed accounting period is one year (or pro-rated for periods less than one year)

Goods, for the purposes of this measure, must be used exclusively for the purpose of the business but exclude the following items:

  • capital expenditure

  • food or drink for consumption by the flat rate business or its employees

  • vehicles, vehicle parts and fuel (except where the business is one that carries out transport services - for example a taxi business - and uses its own or a leased vehicle to carry out those services)

How will I be impacted?

If you fail the tests above, it is likely that your VAT liability each period will increase. The policy paper states that an online tool will be made available to enable current and prospective FRS users to determine whether they must use the new rate. The added administration burden is that businesses are expected to review that they are using the correct rate at the time each VAT return is completed; i.e. on a period by period basis.

In essence, the policy aims to remove most service orientated companies (such as freelancers, consultants, etc) from being able to benefit from the Flat Rate Scheme. If your business provides services, rather than goods, then it is highly likely that you will fail the relevant tests.

It therefore makes sense that all businesses using the FRS review their position before April 2017 to ensure that there are still advantages to using the scheme.


ABC Ltd, a Computer repair services company, currently uses the 10.5% sector rate when calculating FRS VAT. For the VAT quarter ending 30 June 2017, they have VAT inclusive sales of £10,000. Based on the ‘limited cost trader’ test, the flat rate they should apply to their sales be determined as follows:

Scenario Goods Spend in quarter Check 1:
Less than 2% (£200) of quarter Sales
Check 2:
Less than £1,000 p.a. (£250 per quarter)
FRS Rate
1 £360 No No 10.5%
2 £240 No  Yes 16.5%
3 £150 Yes Yes 16.5%

In the first scenario, the business exceeds both tests (i.e. the purchase of goods exceeds 2% of the quarter's sales and is more than the £250 quarterly threshold) and can accordingly use the 10.5 Flat Rate. However, in the second scenario, the business only spends £240, which is less than the £250 quarterly threshold, and must therefore use the 16.5% rate. Lastly, in the third scenario, the business fails both checks, and must use the 16.5% rate.

With sales of £10,000, the business can only apply the 10.5% rate once their spend on goods (including VAT) has passed £250 for the quarter. Below this amount and they will fail both checks.

Next Steps

AccountsPortal will be monitoring the results announced at the end of the consultation period. We will endeavour to incorporate the changes into our FRS feature and will notify users as soon as we have more information.

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Custom CSS for your online accounting invoices

You can now take our great invoice templates and give them your own makeover - styling the CSS of invoices, credit notes and purchase/sales orders is now possible.

This gives you the ability to completely change the colours and style of your online invoices, and make adjustments to the layout. We're excited to see what kind of designs you can come up with! You'll need some experience in HTML and CSS - head over to our Customise CSS help document for more information.

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Accept Online Payments using Stripe

Stripe is one of the leading online payment providers and has shaken up the market with its seamless integration and highly competitive rates. The pricing model varies from country to country but in the UK, for example, charges are as low as 1.4% + 20p per transaction. This makes Stripe a great option for just about any business or individual looking to accept online payments and keep the associated costs as low as possible.

We are very excited to announce that you can now accept payments through Stripe directly from your AccountsPortal online invoices. This means that you can now get paid even faster, thereby improving your cashflow and have all the information automatically reconciled in your online accounting software.

The entire setup only takes a few minutes.

  • Log in to AccountsPortal and register for a Stripe account (or link your existing Stripe account).
  • Activate Stripe for all of your relevant invoice templates.
  • Ensure that the public invoice link tag [online_invoice_link] is in the body of your invoice email.

That's it!

Customers can now pay your invoices online with the click of a button and automatically generate a bank transaction in AccountsPortal marking the invoice as paid.  

Please see the Stripe Integration help document for more information.

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Default Tax Rate for Specific VAT Treatments

This change is only relevant to VAT registered organisations based in the United Kingdom and will be implemented on 11/07/2015. It impacts the use of the following VAT Treatments (all of which do not allow the use of Tax Rates greater than 0%):

·  Sales of Goods to Customer outside EU

·  Purchase of Goods from EU Supplier

·  Purchase of Services from EU Supplier

·  Purchase of Services from Supplier outside EU

Previously, there was no specific Tax Rate defaulting when one of these treatments was used in an Invoice or Bank Transaction. This resulted in Exempt Expense usually being selected as the next available option. 

As of 11/07/2015, whenever one of these VAT Treatments is used, the default Tax Rate will be No VAT unless the default is taken from a Bank Import Rule or Product setting. The motivation for this change is that the use of No VAT results the more commonly required outcomes defined in the help document VAT UK – Box by Box.

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Display of Accounting Partner

If your subscription is associated with one of our Accounting Partners (your organisation was initially set up by your accountant), the accountant’s details will now be displayed in the top right hand side of the screen just below your login information. Please keep in mind that Accounting Partners have full access to your organisation’s financial information.

If you no longer use the services of the accountant, please notify us and we can remove their access accordingly. This is not to be confused with accountants that you may have given access by inviting them to be users from within the Settings of your organisation. You can remove user access in such cases as per the help document on User Permissions.

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Lock Date for Transactions

You can now lock your accounts in AccountsPortal, which will prevent you (or anyone else) from entering any transactions up to a specific date. For example, you may wish to lock your accounts after you have prepared your Annual Financial Statements at the end of the year, or after each VAT report.

Adding or modifying the lock date

To lock your accounts, navigate to your company's Financial Settings and adjust the Lock Date field. You can manually set this to any date that you wish, and as often as you wish.

Once the changes have been saved, then you will not be able to create or edit any transactions with a date on or before the Lock Date.

Changing the lock date

To change your lock date, update the date displayed in the ‘Lock Date’ field and select ‘Save’.

Removing the lock date

You can remove all locks by removing the contents of the lock date field. This will allow transactions to be saved with any date.

Automatically updating the lock date

You can optionally choose to have the lock date automatically updated. If you enable the Auto Lock Date option, then the Lock Date will be automatically set to the End Date of when a VAT/GST/Tax report is saved. Note that if the End Date of the tax report is earlier than the current Lock Date, then the Lock Date will not be updated.

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