Charging for 4 years of vat returns

New client needs 4 years of vat returns calculating and submitting & I don't know what to charge

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Hi all

A new client I've taken on has not submitted vat returns since 2019 and I'm struggling to know what to charge 

He has created an excel cashbook and it's very organised but he has had some issues and not submitted any vat returns since 2019, he's just paid what each hmrc letter tells him to pay  !

I'm putting all his excel info and bank statements onto Xero, reconciling them and then working out what the actual vat figures should be. Then will submit 1 vat return encompassing 2019 - end of 2023. 

I usually charge 35per hour but I feel I should do a fixed rate for this job as inputting onto Xero doesn't take too long, only making sure the vat is correct does. I expect it will take me about 8 hours to do the whole lot.. but should I charge more than per hour as I know a lot of people do fixed rates now ! 

Very straight forward accounts - 4 invoices per month, no expenses - about £100k turnover p/a. 

I've recently been told by an accountant I charge too cheap especially for SA returns which I normally do for 275. So now I'm completely lost in the pricing minefield.. 

PS I'm just a bookkeeper, not an accountant so can't charge accountants fees.. unfortunately ! 

Replies (33)

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RLI
By lionofludesch
21st Feb 2024 18:14

What would you charge for one quarterly return ?

Multiply by 16.

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Replying to lionofludesch:
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By Paul Crowley
22nd Feb 2024 16:37

I take the same approach. But maybe a couple are free.
Too much discount and client will reverse engineer a price per return a bit too low, and not appreciate that 4 quarters take longer than 4 at once

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By Wanderer
21st Feb 2024 18:20

jmsed wrote:

Then will submit 1 vat return encompassing 2019 - end of 2023. 

Can you do that?
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Replying to Wanderer:
RLI
By lionofludesch
21st Feb 2024 18:32

Wanderer wrote:

jmsed wrote:

Then will submit 1 vat return encompassing 2019 - end of 2023. 

Can you do that?

If that's the return HMRC issues, you've no option. You must.

This is, presumably, a late registration case.

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Replying to lionofludesch:
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By Wanderer
22nd Feb 2024 04:51

Big presumption? OP didn't say client had *never* submitted returns, OP said "not submitted *since* 2019".

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Replying to Wanderer:
RLI
By lionofludesch
22nd Feb 2024 06:23

Wanderer wrote:

Big presumption? OP didn't say client had *never* submitted returns, OP said "not submitted *since* 2019".

Absolutely. The OP came up with the salient facts eventually. Nevertheless, the point is that HMRC choose what periods returns are to be submitted for, not the trader.

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By Matrix
21st Feb 2024 19:03

You will need a big buffer for dealing with the MTD and non MTD periods, especially if the periods don’t align, penalties, reconciling amounts paid, dealing with HMRC.

If you are happy with your rate then that is all that matters.

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Replying to Matrix:
RLI
By lionofludesch
21st Feb 2024 19:13

Matrix wrote:

You will need a big buffer for dealing with the MTD and non MTD periods ...

It's just one period.

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Replying to lionofludesch:
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By Matrix
21st Feb 2024 19:26

The poster says they will submit one return. This is all fine if this is what HMRC are expecting.

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VAT
By Jason Croke
21st Feb 2024 19:28

Agree with the others, it'll be one long return, all filed under MTD.

Although one long return it is still in effect 4 quarters per year, times 4 years (16 returns), yes there will be some time saved in terms of filing just the one, but my stance is if client was not normal and you were just doing normal, on time returns, you'd charge per return, even if a Nil return/minimal effort and so this is no different.

Quote on that basis and then if you do it quicker and feel inclined, you can bill less than quote and you and client will be happy.

Don't forget to see if flat rate works out better for the historical period, depends on trade sector, whether they have input tax to reclaim, etc.

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Replying to Jason Croke:
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By jmsed
21st Feb 2024 20:21

I presumed I could do 1 long return to cover the 4 years as the last return he submitted was May 2019.

He’s been paying the fines and hmrc’s estimates through debt collecting agencies, but hmrc now want a huge lump sum from him because they don’t think he has paid a lot of them.

I’m thinking once I have all the info in xero and have worked out each vat quarters figures and looked at what he’s paid to the debt collectors etc, then I can ring the vat helpline and ask how they want it submitted via mtd - whether they’re ok with 1 long return covering the whole period of 3 years?

Is that the way you’d go around it?

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Replying to jmsed:
RLI
By lionofludesch
21st Feb 2024 20:39

jmsed wrote:

I presumed I could do 1 long return to cover the 4 years as the last return he submitted was May 2019.

He’s been paying the fines and hmrc’s estimates through debt collecting agencies, but hmrc now want a huge lump sum from him because they don’t think he has paid a lot of them.

I’m thinking once I have all the info in xero and have worked out each vat quarters figures and looked at what he’s paid to the debt collectors etc, then I can ring the vat helpline and ask how they want it submitted via mtd - whether they’re ok with 1 long return covering the whole period of 3 years?

Is that the way you’d go around it?

Ah - if those returns were issued, you'll have to complete them as they were issued.

Looks like being your first job.

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Replying to lionofludesch:
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By FactChecker
21st Feb 2024 20:59

Plus that's the first mention that he’s been paying the fines and HMRC's estimates through debt collecting agencies ... so, when OP finally reaches the point of trying to work out how much client stills owes HMRC, OP is going to need some paperwork regarding those payments.
Not just the distinction between estimated VAT amounts and any fines/penalties, but potentially amounts that were hived off by the debt collection agency rather than passed on to HMRC.

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By paulhammett
21st Feb 2024 22:47

And make sure you get paid upfront. Don’t do it otherwise.

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Replying to paulhammett:
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By Paul Crowley
22nd Feb 2024 16:39

Absolutely critical

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By I'msorryIhaven'taclue
22nd Feb 2024 08:59

Side issue, but related: what's the thinking regarding claiming input VAT from suppliers' statements to fill the gaps where there are missing purchase invoices?

We've a similar case going back a couple of years - late registration in our case - and it's a b*llache having to go back into the accounts software every time a purchase invoice turns up to edit the transaction to include input VAT. Do others input and claim VAT from the suppliers' statements (or even from unsupported bank payments alone) where a regular supplier (Vodafone / Jewson / Halfords ) who is known to charge standard VAT every time is missing a purchase invoice?

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Replying to I'msorryIhaven'taclue:
RLI
By lionofludesch
22nd Feb 2024 09:16

Absolutely. I've had a couple of clients where the basic purchase records were kept on a cash basis. The main suppliers had about 80-100 invoices a month. I claimed a sixth as VAT.

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Replying to lionofludesch:
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By I'msorryIhaven'taclue
22nd Feb 2024 09:29

Hi Lion, and thank you.

Is that a vote for absolutely to claiming such VAT inputs from suppliers' statements (say by raising dummy purchase invoices through a suppliers' ledger)? Or absolutely to claiming those same VAT inputs directly from bank payments where no purchase invoice or supplier's statement is available?

Last time I had a late registration of many years like this was pre-MTD; when quantifying the VAT was so much easier on a spreadsheet.

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Replying to I'msorryIhaven'taclue:
RLI
By lionofludesch
22nd Feb 2024 09:38

I'msorryIhaven'taclue wrote:

Hi Lion, and thank you.

Is that a vote for absolutely to claiming such VAT inputs from suppliers' statements (say by raising dummy purchase invoices through a suppliers' ledger)? Or absolutely to claiming those same VAT inputs directly from bank payments where no purchase invoice or supplier's statement is available?

Last time I had a late registration of many years like this was pre-MTD; when quantifying the VAT was so much easier on a spreadsheet.

It's a vote for not wasting time adding up VAT on a boatload of invoices, only to discover it's 2p different to a sixth of the payment. But - yes - that might include a missing/lost invoice or two. Obviously, materiality's a factor. So is doubt as to the rate at which VAT's charged; at a grocer's, for instance. But the odd trivial missing invoice isn't what your VATman is looking for at a control visit.

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Replying to lionofludesch:
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By I'msorryIhaven'taclue
22nd Feb 2024 10:45

Thanks Lion, that's useful insight.

Going back over Xero for the past couple of years to adjust monthly bank payments to a builders' merchant for one sixth input VAT is relatively easy; the alternative of inputting a hundred purchase invoices a month for that builders' merchant to a purchase ledger seems like a waste of time, given that most of the purchase invoices are missing and would have to be entered from the supplier's statement.

Either way, I have that nagging doubt about claiming input VAT from suppliers' statements where the purchase invoices (around 50%+) are missing. A jobsworth VAT inspector would no doubt want to disallow such inputs, and I'm torn between an equitable solution and winding my neck in.

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Replying to I'msorryIhaven'taclue:
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By I'msorryIhaven'taclue
22nd Feb 2024 11:41

In my client's circumstances, I'm mindful that the client arguably "has systematically failed to obtain a valid VAT invoice" and that HMRC will therefore "not consider exercising its discretion" (by allowing alternative evidence such as bank statements or suppliers' statements to support the input VAT claim).

https://www.gov.uk/guidance/vat-guide-notice-700#section16

In particular:
16.8.2 "Where it’s satisfied that the business has taken reasonable steps to comply with the legislation, and that the supply has taken place, HMRC may consider exercising its discretion. But, where a business has systematically failed to obtain a valid VAT invoice HMRC will not consider exercising its discretion."

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Replying to I'msorryIhaven'taclue:
RLI
By lionofludesch
22nd Feb 2024 12:04

I'msorryIhaven'taclue wrote:

In particular:
16.8.2 "Where it’s satisfied that the business has taken reasonable steps to comply with the legislation, and that the supply has taken place, HMRC may consider exercising its discretion. But, where a business has systematically failed to obtain a valid VAT invoice HMRC will not consider exercising its discretion."

Sure.

Client needs telling.

But it's the client's risk.

Thanks (1)
Replying to I'msorryIhaven'taclue:
RLI
By lionofludesch
22nd Feb 2024 11:59

I'msorryIhaven'taclue wrote:

Thanks Lion, that's useful insight.

Going back over Xero for the past couple of years to adjust monthly bank payments to a builders' merchant for one sixth input VAT is relatively easy; the alternative of inputting a hundred purchase invoices a month for that builders' merchant to a purchase ledger seems like a waste of time, given that most of the purchase invoices are missing and would have to be entered from the supplier's statement.

I can't really see the point of entering purchase invoices unless you're doing it in real time. If you're doing the work after the quarter end in March, what use is it to the trader to know how much he owed a supplier on 18th January?

Even if you're working in house in real time, I'd question the cost/benefit ratio of that.

Lost invoices ? As I said, materiality is important. One or two I'd overlook. Get as far as half* and you're starting to think "PITA client", are you not? If he can't do better than that, maybe he needs to flit to an accountant with lower standards.

*Although, even at half, in number or value, I'm still not sure that's what VAT officers are looking for.

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Replying to lionofludesch:
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By I'msorryIhaven'taclue
22nd Feb 2024 13:33

Good point, I'll emphasise the risk lies with him. More and more purchase invoices keep turning up, which I suppose makes claiming inputs from bank payments and not from a purchase ledger something of a no-brainer.

There's probably been too much reliance on uploading documents to match and "authorise" them against bank payments. Like the gal on the escalator in the QuickBooks TV Advert. Snap, upload, and it'll all take care of itself. It's going to have to be the old-fashioned method of statements, invoices, and stapler!

Thanks for all your help!

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Replying to I'msorryIhaven'taclue:
RLI
By lionofludesch
22nd Feb 2024 14:09

Agree. It's nice having all these invoices emailed to the business owner but, if you're the external bookkeeper, will you get them? Probably not. You need a bit of paper that they've kept in a box for you.

As an aside, I recall asking to see delivery notes for a reasonably large concern back in the 1970s. The warehouse manager presented me with this decrepit box of documents.

"What order are they in?" I asked.

"Order?" he said, visibly surprised. "Box order. The order I chuck them in the box."

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Replying to lionofludesch:
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By I'msorryIhaven'taclue
22nd Feb 2024 22:15

Thinking inside the box!

As a 1970s audit senior (ie a young non-shaver) yours truly always lloked forward to oodles of coffee, chocolate-biscuits, and toadying-up from warehouse managers and the like. Mrs I'msorry worked at Eagle Star - remember those? - and I recall her telling me that an impending visit from the auditors meant all leave would be cancelled and the petty cash tin would be balanced and all decks scrubbed till you could see your face in them. I may have mixed-up my metaphors there, but the point is I didn't get where I am today by inside the box thinking ;)

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Replying to I'msorryIhaven'taclue:
Pile of Stones
By Beach Accountancy
23rd Feb 2024 14:16

Super! Great!

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By Matrix
22nd Feb 2024 10:20

Tax returns may also need changing. You could offer to help with this if you like this sort of thing and would result in increased fees. Not having an adviser has cost your client so building up trust could work well. But get paid in advance since he historically didn’t value professional help.

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By Rgab1947
23rd Feb 2024 10:26

What £35 p.h. And you want to discount?

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Replying to Rgab1947:
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By B Roberts
23rd Feb 2024 11:13

Rgab1947 wrote:

What £35 p.h. And you want to discount?

It seems that the OP is viewing the job as effectively 8 hours of data entry? - is this what the client thinks they are getting?

Also - the following comment does not suggest that the client is "very organised" - what makes the OP think that they have suddenly become organised?

He has created an excel cashbook and it's very organised but he has had some issues and not submitted any vat returns since 2019,

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Replying to B Roberts:
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By Matrix
23rd Feb 2024 13:48

I would have used bridging software and saved 8 hours.

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Replying to Matrix:
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By Jabba the Hut
23rd Feb 2024 19:21

Too right, Xero is a ball aching piece of PITA software for small companies and businesses, great it you have a proper accounts department but small jobs it's overkill

Assuming cash accounting if I had a spreadsheet I would spend a short while tailoring it to upload as bank transactions and wop it into Kashflow - jobs a good un.

I am concerned someone is charging £35ph as a book-keeping and is clueless how MTD works though!

HMRC push down the periods to the bookkeeping software which then calculates the VAT returns in the specified periods.

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Replying to Matrix:
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By Jabba the Hut
23rd Feb 2024 19:21

Haven't been here for a while, forgotten about the lag so you end up posting multiple times, have they still not sorted it!

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