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.
Replies (13)
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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.
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
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.
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.
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.
Insert the relevant VAT code in with the title of the nominal ledger, e.g. "Mtce costs - sport VAT13" and "Mtce costs - bar VAT12!?
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.
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
Hi
Try looking at Croft Computer Systems. Their software is specifically for Golf Clubs and deals with partial exemption