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MTD and software for VAT partial exemption

Looking for online accounting software for VAT partial exemption client

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I am helping a client that currently uses spreadsheets for all its accounting and bookkeeping.  It is VAT registered and will be in MTD from April 2019.  The entity is a club that is an unincorporated association, and it is partially exempt.  It has 5 people who provide information to the accounting system and so an online software package would be the most suitable. 

I have looked at QBO but it doesn't track the VAT that "belongs" to the different cost codes and consequently it doesn't really work for partial exemption.  All the VAT is recorded in the VAT control accounts, and all history relating to the VAT is promptly lost.  QBO doesn't provide reports that can be used easily when doing the PE calculations eg the transactions histories only show the costs in the cost codes, and not any VAT related to the transactions.  I know that HMRC has provided an "exemption" to allow entities in MTD to use spreadsheets for complicated calculations.  However QBO doesn't work for the stage before that.

Is anyone able to suggest an online software package for my client that deals with partial exemption easily?  With many thanks for your help.

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27th Mar 2018 11:07

I think you're worrying too early
How can anyone tell when HMRC don't inform us what is happening. Maybe next year....................maybe not.

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27th Mar 2018 14:10

QBO online would track it sufficiently you would just need to ensure that it was set up correctly. If you set up your purchase VAT codes as S Taxable, S Exempt and S Residual at the quarter end you could run reports on each to get the required figures for the calculation on a spreadsheet then make a journal adjustment as required

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27th Mar 2018 14:24

Partial exemption is relatively rare. I'd be surprised if a software company would find it commercially viable to write a routine to track input tax deduction entirely automatically.

I may be wrong but I suspect you're going to need to track this outside the main accounting package.

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By Briar
27th Mar 2018 15:45

I act for a couple of golf clubs who are partially exempt for VAT.
At one, we use Sage but use T1(20%) and T5 (5%) for fully claimable VAT and T3 (20%) for partially claimable VAT. We have to download the transaction file into Excel and sort it so as to calculate the T5 VAT before allocating it. Its relatively easy to do (and fortunately it is an annual scheme so only needs doing once a year)
At the other club, we use the partially exempt VAT rate from the previous year and apply that to VATable expenses. An annual adjustment is made (if material).
Certainly, MTD software will not cope with these but HMRC will have to lump it.

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27th Mar 2018 18:05

We have a (property investment) PE client on Xero & have set up the tax codes as “20% - Commercial”, “20% - Resi”, “20% - Other”. When I run the VAT Return, the transactions are split into those 3 categories. I have a spreadsheet templated so I just punch in the relevant figures from the VAT Return and the P&L, then jnl an adjustment if necessary.

Works perfectly.

Sometimes I even remember to attach the spreadsheet to the journal so the record is contained within Xero.

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28th Mar 2018 13:18

Thank you for your replies.

I have thought about your suggestions. I think the problem is that there are five treasurers for the club who are inputting the information into the accounts: one senior treasurer and four sub treasurers, one for each sports section. They are all volunteers and are not bookkeepers or accountants.

The sub treasurers have a relatively low understanding of VAT. Realistically they are only going to be able to record transactions according to the VAT on the purchase invoice, selecting 20% vatable or exempt. They are not knowledgeable enough to be able to select VAT codes according to the category of sales that the purchase relates to. For example there might be maintenance costs from a particular supplier that vary between the bar and the changing rooms. The sub treasurers can be trained to choose between
Maintenance costs - bar, and
Maintenance costs - sport
However if the procedure is then to select VAT code 12 for the first one and VAT code 13 for the second, it is not going to work. This is just too complicated for them to operate.

I would like to find a software product that will enable the VAT invoices to be input according to the VAT that is shown on the invoice. A report is then obtained and analysis done on the costs incurred and the VAT recorded against each of the cost codes. The PE calculation could then be continued using a spreadsheet.

Happy to receive your further suggestions.

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By Briar
to Jane Evans
29th Mar 2018 13:30

Insert the relevant VAT code in with the title of the nominal ledger, e.g. "Mtce costs - sport VAT13" and "Mtce costs - bar VAT12!?

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to Jane Evans
29th Mar 2018 13:38

Have you/can you set up default VAT codes for each GL code?

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By Briar
to WhichTyler
30th Mar 2018 14:43

Can't do it in Sage. I don't use Xero (as my broadband is not fast enough!) so I don't know whether you can do it in Xero.

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03rd Apr 2018 12:15

Thank you everyone for your comments.

I am working with the treasurer to decide which of the options we will go with. It is likely to be the multiple VAT codes one, but it is not ideal as it is very difficult to obtain useful reports for checking.

Peter, thank you for your suggestion. The sub-treasurers will be doing their bookkeeping from home so we need online software that several people can log into, so a solely Excel based software programme won't work for this club.

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21st Feb 2019 15:30

Hi

I know that Xledger does partial VAT in the system but it's aimed at mid-market. how big is the club?

Kind regards,
Peter

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to PeterHucker
25th Feb 2019 16:59

Hi Peter

Total turnover c £200k.

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