For VAT-registered small business owners, claiming VAT back from pre-registration purchases and backdating transactions can be a real headache, and they’ll often turn to their accountant for guidance. To make it easier for you to support your clients with their VAT woes, FreeAgent have added some new features to their online accounting software that are designed to help you save time in offering a superior service to your clients.
Pre-registration costs dropdown
When you register a client for VAT, you have the option to claim the input VAT they paid on some pre-registration costs for up to four years. That’s why FreeAgent have added a new dropdown - 'Include pre-registration purchases' - to the form you use to set your clients up for VAT in FreeAgent.
This dropdown means you can claim the input VAT for:
assets and stock that your client has bought within four years of their registration date and still owns
services that their business was billed for within the last six months.
FreeAgent will maintain the existing three year pre-registration period for any clients with previously filed returns. To find out more about this dropdown and how to claim pre-registration VAT back on behalf of clients, take a look at FreeAgent’s Knowledge Base article.
New ‘out of scope’ VAT rate option
The software provider have also added a new 'out of scope VAT' rate option. This rate can be used for certain goods and services that your clients may buy or sell that are considered to be outside the scope of the UK VAT system. Your clients won’t charge any VAT if selling these goods and services and won’t reclaim any VAT after purchasing them.
This newly added VAT rate option is not only useful when applying a rate to any new out of scope transactions; it’s also a great way to enter backdated transactions from previous locked periods. This applies to any transactions that haven’t been entered in FreeAgent, such as from VAT returns you submitted outside of FreeAgent prior to MTD.