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Post Info TOPIC: Margin scheme VAT and MTD


Master Book-keeper

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Margin scheme VAT and MTD


Client issues margin scheme invoices directly from accounting†software, which happens to be sage.†

All invoices state margin scheme applies, blur blur.

So†amount of sale, eg†£1000 processed in the software on a zero rated basis.† † † † † †(TO for sage users)

Say purchase price was £400, therefore margin £600, VAT on margin £100.

So can I journal debit sales £100 and credit VAT £100?† † † † † † † †(T9 and T1 for sage users)

Would this be acceptable for MTD purposes. Ive read some guidance that two lines need to be entered, one standard rated and one zero rated (which works for another client, just cant see how I can get round it for this particular client).

Edit - just realised that the journal debiting sales £100 wouldnt remove that element from Box 6 so it wouldnt meet the requirement of VAT notice 718 (full selling price less VAT due! Bugger!)

Will have to see if journalling in 2 widely differing gae versions of sage will report zero rated (T0) adjustments in tax return. I know it will apply the VAT.† † †But there must be a simpler way to process margin scheme so that it fits the 718 and 700/22 guidance, surely, so any ideas greatfully received as my head is too mashed to consider them.



-- Edited by Cheshire on Saturday 6th of April 2019 01:47:14 PM

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Joanne††

Fallows Hall Ltd†

Winner - Bookkeeper of the Year 2015, 2016 and 2017

Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.



Master Book-keeper

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disbelief



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Joanne††

Fallows Hall Ltd†

Winner - Bookkeeper of the Year 2015, 2016 and 2017

Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.



Master Book-keeper

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Hi Joanne†

Maybe post this to aweb?

Only suggestion I can make is to amend the last invoice to show the total VAT due, but that may not be practical for you.

"Alternatively, you can record the sale at one rate and correct the VAT through an adjustment at the end of the period, using the same method HMRC will allow you to use to correct the VAT on a mixed supply"



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John†

†Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.



Master Book-keeper

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Hi John
I posted two VAt queries on Aweb over the last couple of weeks. Both ignored.

Must be something I said!

But thank you for your alternative suggestion, although that the VAT adjustment wont work. Well it will from an accounting point of view - dr sales and cr vat output account. BUT and a big but, the journal DEBIT goes to box 7 (purchases) in the VAt return and does not reduce box 6.

Always done it the way you suggest for one client as a bulk VAT adjustment, BUT who gave a flip flopping damn what it said in boxes 6 & 7. But now we have to get it right. Daft thing is - with a spreadsheet and written accounting methods it couldbe, not software though.

I know not of another way.




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Joanne††

Fallows Hall Ltd†

Winner - Bookkeeper of the Year 2015, 2016 and 2017

Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.



Master Book-keeper

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Ive just posted another Q. A short version of the one Im preparing for HMRC, later on here (perhaps) and my MP plus Mel Stride (pointless though it may be, but I might just stick it to them before I sell up!)


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Joanne††

Fallows Hall Ltd†

Winner - Bookkeeper of the Year 2015, 2016 and 2017

Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.



Master Book-keeper

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Cheshire wrote:

But thank you for your alternative suggestion, although that the VAT adjustment wont work. Well it will from an accounting point of view - dr sales and cr vat output account. BUT and a big but, the journal DEBIT goes to box 7 (purchases) in the VAt return and does not reduce box 6.


†I've just tried it in VT.† †9 invoices for £1000 no vat then the last invoice £1000 sale £1000 VAT. Purchases £4000 no vat.† As long as you have a manual record of the calculation I think that covers both MTD and accounting sides. Only drawback is that particular invoice† recorded wrong on sage, which is why I said it may not be practical to you.

††margin2.png



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John†

†Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.



Master Book-keeper

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Youve lost me. Sorry my migraine is still lurking and its probs just me or maybe just the 9 invoices comment.

So just to check - in your TB you will have £10000 in debtors, £9000 in sales, £4000 in purchases and £1000 in VAT due?

I was going to try it in VT but just had to switch off to it, besides how can I possibly move it all to VT (clients would be an absolute NIGHTMARE to move, given they are all on it, although........perhaps if I can nail it down so ALL they can do is the invoicing on it??)

Can I be cheeky, given you have gone to the trouble of giving it a go in there - can you send me the backup of it so I can have a nosey in mine?

I will defo owe you a couple of beers.

Although we also still have the Accountants to get past as well. Plus the lack of stocking facility. Oh and lack of foreign currency options. Oh bugger, shut my brain up!!!!!

I think if I stick with sage I need a definitive from HMRC given they told someone who reported on Aweb not to report the purchases at all and said all he needed in box 6 was the margin value (apparently!)

THANKS LOADS.

Still offski though!







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Joanne††

Fallows Hall Ltd†

Winner - Bookkeeper of the Year 2015, 2016 and 2017

Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.



Master Book-keeper

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Hi Joanne, copy sent.

Sorry, ignore the 9 invoices comment, I hadn't meant to confuse you.no

Essentially on the last sales invoice of the quarter, enter the VAT due to HMRC and this will record the debtors, sales and VAT correctly.

I can't see why the same can't be replicated in Sage. I would have tried it but haven't used Sage for years.

<giggle>† Well if that's the way HMRC have suggested to do, that's obviously the right way!! </giggle>



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John†

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Master Book-keeper

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Hi John
Copy receveid.....that made it much easier to understand.

Cracked it - you super star!!!!!! As I said in my email back to you - I owe you a few beers!!!!!

Sage -double line sale £x zero rated, then a £0 standard rated, overkey £0 VAT with VAT margin. Soooooo simple when you know how, or concentrate harder/spend quality time looking at your software, or have a John star on hand.

Just the Part exchanges to sort. Later sage versions have that one sorted easily, older not so. But hey if HMRC are gonna moan then they can sod right orf.

VAt recs will be even more interesting than they are now as concentrating whilst keying will be interesting, double lines for each one, rather than total VAT adj at end of each quarter (thousands of lines!)

Thanks bud!!!!!!!!!!

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Joanne††

Fallows Hall Ltd†

Winner - Bookkeeper of the Year 2015, 2016 and 2017

Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.



Master Book-keeper

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Hi Joanne

Glad I was able to help. You've helped oodles of peeps on here, sometimes without even a thank you, so a bit a karma back at you doesn't go amiss. When I started fiddling I tried doing it with a journal, but as you found out in sage it mucks up the purchase box on the VAT return.† Then I re-read the 700/22 and I thought, what if I just knock the total VAT off the final invoice, and bingo it worked.

If you do it per invoice isn't that going to double your keying in time?† Be a right pain if it does.



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John†

†Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.



Master Book-keeper

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Leger wrote:

If you do it per invoice isn't that going to double your keying in time?† Be a right pain if it does.


Oh yes, but the way Ive (scan) read it, you have to do per line entry now for MTD so....so be it.† †Except I havent got the time to do what one of them needs now (the other is ok!) and whilst they pay me with no quibbles they are not going to like the extra fees - he went as pale as a ghost when I told him my fees which went from a relatively small fixed fee† to c 5 x when I took over actually looking after their stockbook. Mind you I think they must appreciate it - they pay within minutes of sending my invoice every month so not one I would necessarily want to lose.

Just need to try to resolve how to get information in a more timely/efficient/less query prone manner.†



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Joanne††

Fallows Hall Ltd†

Winner - Bookkeeper of the Year 2015, 2016 and 2017

Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.



Master Book-keeper

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Leger wrote:

Hi Joanne

so a bit a karma back at you doesn't go amiss.†


Ah John, thanks. I defo need that this week as the list of traumas is getting longer by the bloody minute to the point of me sitting here almost blubbing in the middle of the day.



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Joanne††

Fallows Hall Ltd†

Winner - Bookkeeper of the Year 2015, 2016 and 2017

Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.



Master Book-keeper

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Cheshire wrote:
Leger wrote:

†If you do it per invoice isn't that going to double your keying in time?† Be a right pain if it does.


Oh yes, but the way Ive (scan) read it, you have to do per line entry now for MTD so....so be it.† †


†There's also an option in 700/22 to overwrite the VAT so I don't see why this can't be done at the end on the last invoice(s). It shouldn't affect MTD as the transaction is done before it becomes a digital link.† I'm not saying I'm right, that is just my interpretation.



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John†

†Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.



Master Book-keeper

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There is, other than for deposits, only one invoice per transaction.

In part the whole process got me confused because I usually have the sales invoices way before the purchase invoices it's to do with printed invoice book numbers and having to wait whilst 50 items are bought before I see them. Sales books get filled up much quicker because a lot of stuff is also bought in via part ex. So I'm often 2 sales books ahead of the one buyin book. Hence why it's currently zero rated for all sales, manually adjust the vat at the end. But the latter will not work because of the journal debit issue reporting wrongly.

I've jumped in already and told them that I need purchase invoice books to contain lower numbers so I can get the info earlier. They've agreed once the existing stock has been exhausted. Need a meeting to discuss how best to get the info earlier etc as well.

I could over key the vat on one invoice, only poss an issue when the deposits run to 20+ transactions, but in truth its probably quicker to key 2 lines into sage, as I can have several lines dones whilst Im working out the vat margin one one, unless I can add the extra calcs to† easily extract the information from the stockbook for one sales book at a time to save thinking about the keying as Im inputting into sage (I'm already once into SB and once into sage)and deliberately did not add extra columns for deposits given you never know how many can be included and being mindful to ensure the vat Rec is easy, it's a bloody painful process now half the time. ( Pondered today for all of 5 minutes until I started getting stupid calls on other subjects). Will overhaul the whole process perhaps during May once this vat is done.† Part of the issue is that it works now, after tons of tweaking and its working bloody well so I dont want to change it too much if I can!)



-- Edited by Cheshire on Tuesday 9th of April 2019 11:34:29 PM

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Joanne††

Fallows Hall Ltd†

Winner - Bookkeeper of the Year 2015, 2016 and 2017

Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.



Master Book-keeper

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This is a question, possibly Vince or Ian might know

Could you have a macro of some description (whether on Sage or the CSV) where you enter the total VAT at the end of the quarter, which then amends the vat return that goes through to the API† (I assume you will be filing with bridging software?)†

That to me would be acceptable for MTD although considering HMRC accepts manual adjustments I'd be sorely tempted to amend the CSV manually anyway!



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John†

†Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.



Master Book-keeper

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Use of macros is where I usually bow out......my excel skills are pretty poor, although my VAT reco on the SB Im quite proud of (even though someone else might think its pretty dismal).

I might have to pay around with it when I have some free time (hahahahaha, whats that!)?

Thanks John

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Joanne††

Fallows Hall Ltd†

Winner - Bookkeeper of the Year 2015, 2016 and 2017

Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.

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