Setting up VAT in FR Books

When you initially set up FR Books, you should have entered your VAT settings in the new company wizard. However, it is worth double checking your settings before you run your first VAT return

To check these settings, go to Company Settings > Financial Info Tab

• Tick 'Business is VAT registered'.

• Enter your VAT number and your VAT registration date. This is shown on your VAT certificate or you can get it by calling HMRC.

• If your business sells to or buys from other VAT registered businesses in Europe, then tick the relevant checkbox. This will enable EU VAT codes which populate your EC sales list and include those transactions on your VAT return in the correct way.
• Click on the 'VAT Schemes' button and set the scheme that you are on. The options you have are:

Invoice Based: This is the most common scheme and is standard when registering for VAT. FR Bookswill calculate the VAT on your sales and subtract the VAT on your purchases/expenses to give you the amount due to or from HMRC each quarter.

Cash Accounting: This is similar to Invoice Based VAT but the VAT becomes due when payments are made and not when invoices are entered. You can switch between Invoice Based and Cash Accounting VAT without informing HMRC.

Flat Rate - Cash Accounting: This is a scheme that simplifies VAT meaning you pay a flat percentage to HMRC rather than offsetting your sales VAT against your VAT on purchases. You must apply to HMRC to join the Flat Rate Scheme.

Cash accounting means that the VAT becomes due when you receive your payments from your customers, not when you create the invoice.

Flat Rate - Invoice Based: This is the same as above, except the VAT becomes due at the point you invoice your customers instead of the point you get paid.

It is important that you select the right scheme for the relevant periods as incorrect selections will mean your VAT returns will be inaccurate.

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You only need to enter a percentage if you are on the Flat Rate Scheme (FR Books will know the standard rate). For those on the Flat Rate Scheme, you will need to enter the full percentage of your flat rate. FR Books will automatically calculate the 1% discount you are entitled to for the first 12 months from VAT registration.

If you change your scheme you will need to update these settings. Simply add a new scheme with the start date of the switch (usually the start of a new VAT quarter). You do not have to worry about inconsistencies when switching, as FR Books has been designed to calculate switching between schemes error free.

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