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MTD spreadsheets and rate of VAT

VAT Notice 700/22 4.3.2 says 'For each supply you make you must record the:

  • time of supply - the tax point
  • value of the supply - the net value excluding VAT
  • rate of VAT charged

Note the requirement to record the rate of VAT - there is no requirement to record the actual output VAT.

The spreadhsets used by our clients don't record the rate: they record the gross, VAT and net. We'll be using Absolute VATfiler to link these to HMRC. Does anyone intend to amend their spreadsheets to record the rate of VAT in accordance with 700/22?

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By Mr_awol
26th Mar 2019 10:00

kevinringer wrote:

Does anyone intend to amend their spreadsheets to record the rate of VAT in accordance with 700/22?

No.

Or, you could set the VAT column to calculate via a formula, rather than typing it in, to be compliant. I wouldn't be losing a moments sleep over it either way TBH

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26th Mar 2019 10:04

It has always been a requirement to record the vat rate on the invoice or the line items and it has always been a requirement to retain a copy of that invoice. The requirement to store this information digitally means that if you don’t currently store the rate (why not?) then you should start to do so.

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to Tim Vane
26th Mar 2019 10:19

so if everything has been completed incorrectly for 40 years plus ( mine time in Accountancy ) is their not a case to complete digital records in a form other than laid down in the VAT notice , in other words the VAT notice has not been enforced in my 40 years so why change now ?

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By GW
to Tim Vane
26th Mar 2019 13:04

Isn't the issue that in the past you could record the VAT rate on the invoice only, it didn't have to be recorded in the sales day book, now it appears the invoices do not need to be kept as part of the digital records but the rate does.

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to GW
26th Mar 2019 13:25

Quite.

But does much of the software actually do that? In such, its usually done by codes (or formula coding or whatever you call it) in the background.

Question is - will the vat rate show separately on MTD reports from the software, or is all this just ridiculous overkill.

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to Cheshire
26th Mar 2019 13:48

Definitely overkill. Manual VAT records never listed the rate. HMRC officers never queried the absence of a rate. HMRC officers were only ever interested in the amount of VAT charged: was it correct?

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By GW
to Cheshire
26th Mar 2019 13:54

My guess is this is overkill because someone failed to notice VAT/Net = rate

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26th Mar 2019 10:57

If it records the VAT, net and Gross, then surely it also records the rate?

Or at least if HMRC looked at it you could drop a quick column and make it so. *coughs*

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26th Mar 2019 13:09

I'm guessing they want the rate recorded as a separate item so that, in the fullness of time when every transaction will be uploaded to their servers (and at which point the Revenue will probably also be telling us what colour underpants to put on every day), our lords and masters can undertake exception reporting. Or at least that's likely to be their fantasy.

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26th Mar 2019 15:01

I don't believe there is a difference between recording the net and the VAT rate or the net and the VAT amount. It is, by any reasonable mathematical definition, identical.

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30th Mar 2019 23:33

VTT+ already does this in the input and output VAT tabs.

On a spreadsheet surely it's just a case of adding a VAT rate column?

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01st Apr 2019 09:54

There is a key difference between rate and VAT. For example, our local agricultural supplier sells a mixture of goods at standard, reduced and zero rate. The invoice issued to account customers lists all products and rates. One invoice might be £100 @ 20% and £100 @ £0 so total net £200, VAT £20, gross £220. The business' VAT listing merely says gross £220, VAT £20, net £200. So what is the VAT rate? It is not 10% because there is no such thing as a 10% VAT rate. So the seller has to change their VAT records to separate the two different rates. That is my point: currently they don't have to do that.

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to kevinringer
02nd Apr 2019 15:47

They'll need to break down these into 1 line for the VATable amount, and 1 for the non. This is where the VAT rate and a flag would come in handy to spot!

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02nd Apr 2019 15:45

Hey Kevin,

We'd recommend adding a simply VAT rate check column, and automating a formula to ensure the correct amounts are charged. You could also add a handy conditional formatting to flag anything that isn't a standard VAT rate, catching split supplies that would need to be broken down into separate lines. Overkill? Perhaps.. Peace of mind? Priceless.. Handy for clients? Only if they look at it..

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