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How to do VAT return corrections on Xero report?

It's easy to amend totals on HMRC website but can't find the option on Xero.

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I am about to complete last VAT return for the previous financial year and noticed that one nominal had wrong VAT rate coded all year long.

It was marked as zero-rated when in fact should be 20% and claimable. As result, there is some money that company can claim back from HMRC.

 

HMRC said I don’t need to report anything in this case on 652 form- just claim it back on the next (this) VAT return (adjust box 4).

Now, as simple as it is to put numbers manually through HMRC website- I cannot actually adjust it on Xero manually because VAT amount is generated by Xero.

 

Also, I thought of changing VAT rate for this whole nominal and actually submitting 652- but unfortunately Xero does not adjust historical transactions.

 

Does it mean that I must go to all 100 historical transactions from this nominal- amend the VAT rate and then submit error adjustment forms to HMRC to merry Xero results up with HMRC database?

 

Thanks for the reply in advance!

Replies (8)

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By ireallyshouldknowthisbut
02nd May 2017 15:12

Eh?

You need to correct your accounting software.

You then need to file the adjustment as part of your next return.

*how* you do it, is up to you.

If you do it as a journal then it probably wont show in the next report, if you do it "line by line" it will show as an adjusting entry in the next Xero report.

I dont know the best method, perhaps ask your accountant? If you are the accountant I give up!

Thanks (1)
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By Jdopus
02nd May 2017 15:29

You do need to amend the transactions individually but there are shortcuts to doing these corrections.

If they're posted as bank payments you can simply mass unreconcile all the items then repost them using the section called "Cash Coding", which allows you to quickly enter details for similar items.

If they're posted as invoices, you can export them as a csv file, make the VAT adjustment in this csv file, then import them back in to save you going through each bill individually and editing them one by one.

If you use either of these two methods then all you need to do is ensure the box called "Include Late VAT Claims" is ticked next time you submit a VAT return on Xero and it will automatically adjust your VAT liability to account for these corrections.

There is no need to submit error adjustment forms to HMRC unless the adjustment is greater than £10,000.

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Replying to Jdopus:
Man of Kent
By Kent accountant
02nd May 2017 16:49

No, no, no! You're making it very hard for yourself!

Use the find and recode function - select the items to recode and just amend the vat rate.

Run the vat return again and you'll see all the items corrected and shown as prior period adjustments.

Very simple and quick.

Thanks (3)
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By NLB
02nd May 2017 21:40

What Kent Accountant said....as long as previous returns have been published in Xero otherwise adjustments will show up in prior returns which is not what you want.

Alternatively assuming all transactions are the same you can post one correcting bill to the nominal with minus the amount without VAT and adding the same amount with VAT in another line.

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By NLB
02nd May 2017 21:40

What Kent Accountant said....as long as previous returns have been published in Xero otherwise adjustments will show up in prior returns which is not what you want.

Alternatively assuming all transactions are the same you can post one correcting bill to the nominal with minus the amount without VAT and adding the same amount with VAT in another line.

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By Ronster
03rd May 2017 12:16

Thank you all!
I published all reports, printed old VAT returns to compare values,
then used Kent Accountant's method and re-coded all transactions (super helpful KA-thanks).

If that didn't work, NLB's method with double entry journal is a nice trick- good to know for the future.

So I ticked "Include VAT late claims" and it changed values for all VAT return reports.
Each one turned underclaimed by nice amounts.

Now- sorry again- but these questions arose:

*Should I publish new VAT return reports again? If yes, do I copy and edit old published, or delete old published and publish new again?
*When completing VAT return on HMRC website, do I go with the result of latest Xero report, or do I also claim back money owed that showed up in other new VAT reports for rest of a year?

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By NLB
03rd May 2017 12:24

Nice one Ronster!

If you had the previous VAT returns published then the most recent VAT return should adjust for the changes as late claims. Publish the latest VAT return and use the vat audit report to check that if comes through in the late claims section.

Once you are satisfied it is showing up in the most recent VAT return why not file the VAT return through Xero using your HMRC online credentials. Also tip for the future, why not setup a VAT DD in your HMRC online account so when you file through Xero HMRC will take payment of what is due automatically. You even get an extra 3 days as the DD's generally go out on the 10th rather than manual payments on the 7th. Works well in our experience and who doesn't want an extra 3 days :)

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By Ronster
03rd May 2017 13:00

Doh- I should have thought of looking at the latest report first :)
Yes, it does include absolutely all transactions from start of a year, so I have a nice and tidy result thanks to you both. (saved me a great deal of stress, so much appreciated).

Filing to HMRC through Xero- on my "to do list" now

About old published VAT reports- should I delete and publish again? They seem pointless now on Xero, confusing accountants. OR will it create some mess I'm unaware?

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