Introduction

VAT Guidelines

The system allows for the submission of VAT (Tax) Returns on both the Invoice and Cash basis according to UK and Irish rules, respectively.

• Invoice Based:  The VAT (Tax) returns are based on the value of the VAT (Tax) associated with Sales and Purchase Invoices (and Credit Notes).
• Cash Based (Ireland):  The VAT (Tax) Return is based on the value of the VAT (Tax) associated with total Sales Receipts less the VAT (Tax) associated with Purchase Invoices (& Credit Notes).
• Cash Based (UK):  The VAT (Tax) Return is based on the VAT (Tax) values associated with total Sales Receipts less total Purchase Payments.

For further information:

 UK Cash Accounting for VAT 

Accounting for VAT on monies received

Managing VAT Returns 

In AccountsIQ, you can:

• Continually update your VAT (Tax) Return as the VAT (Tax) Period progresses:
  • When you add (or allocate) Transactions to a particular VAT (Tax) Return, you can save the Return and later add more transactions or unallocate previously allocated transactions. 
  • When you close off your VAT (Tax) Return and submit it to the Revenue Authorities, any Transactions that are not in that Return will be presented for inclusion in the next Return.
• Maintain multiple VAT (Tax) Returns simultaneously. 

See: 

11.7 Tax Reports - AIQ Academy

Create a New VAT (Tax) Return

1. Go to General > VAT Management. The VAT Return Listing screen shows your Returns history. If there is no previously saved Return, click New Entity Return to open the Entity VAT Return Details screen.
   
   
   
2. In the header, enter:
   • VAT Return Reference: Enter a unique Return Reference to identify this Return. If you have established the connection to HMRC, it will automatically be filled in from HRMC records based on the current return obligation.
   • VAT Accounting Method: Enter the VAT (Tax) Accounting Method that you are using.
   • Returned From, Returned To: Enter the first and last dates of the Transactions you want to include in the Return. If you have established the connection to HMRC‍ , they will automatically be filled in from HRMC records based on the current return obligation. Any transactions in the system prior to the Returned From date, which have not yet appeared on a VAT (Tax) Return will appear until added to a Return, except those with Excl. checked.
   • Refresh: Click to bring in any new transaction data.
     
     
3. Click Save.

Adding New Transactions to a VAT (Tax) Return

To evenly spread the workload, it is advisable to update the VAT Return on an ongoing basis throughout the VAT (Tax) Period.

Refreshing Transactions

1. Open the current Return you are working on by clicking on its Return Reference. Open returns will have a status of In Progress.
    

   
   

2. Click Refresh to see the latest set of Transactions entered but not yet added to your VAT (Tax) Return. They will appear under the appropriate tab: Sales, Purchases, Cash & Bank, and General. The VAT Reporting tab displays the status of your VAT (Tax) Return fields for all transactions added so far.
   
   
3. Add Transactions to your Return by checking the boxes.
4. Click Save to add this transaction to the ongoing Return. When you next click Refresh, these transactions will not appear. You will only see new transactions. 

Refining your Transaction Search

Use the dropdown filters to refine your search.

• Select only those transactions not yet added to the Return (Unchecked), or those already added (Checked): 
  
  
• Click the key icon to get search parameters:
  
  

Viewing Transaction Details

Examine transaction details by clicking on the + symbol and access the Master Record by clicking on any of the fields in blue:

Submitting a VAT (Tax) Return

Tax Return Summary Reports 

In the VAT Reporting tab, under VAT Reports, you can view two VAT (Tax) Summaries (Irish Format and UK Format) that detail the required entry fields for the VAT Return.

UK Registered Companies

For information on how the UK online Service works see:

 Submit a VAT Return (UK)

 Submit VAT Online (UK)

 How to make a VAT (Tax) Payment

The following is a sample of the UK VAT (Tax) Summary Report. (Ensure your Language Settings are English (UK) and not English (US)):

• Field 1: This includes the total of all VAT on Sales plus grossed up value of EU Purchases (purchase transactions marked with EU Trade and Services flags) as well as GL Journals where the value is negative, i.e., increases your liability to the tax authority.
• Field 2: This includes the total of all VAT on EU Purchases of goods (grossed up value of VAT for transactions flagged as EU Trade and Goods).
• Field 4: This includes the total of all VAT on Purchases plus grossed up value of VAT on purchases marked as EU Trade (including Services and Goods). This also includes GL Journals from the General tab where the value is positive, i.e., decreasing your liability to the tax authority.
• Field 6: This includes the total of all Sales excluding VAT plus the total of all Purchases flagged as EU Trade & Services excluding VAT.
• Field 7: This includes the total of all Purchases excluding VAT plus the total of all EU Purchases (transactions marked as EU Trade: Goods and Services).
• Field 8: This includes the total of all EU Sales of goods (transactions flagged as EU Trade and Goods only) excluding any Services and any VAT.
• Field 9: This includes the total of all EU Purchases of goods (transactions flagged as EU Trade and Goods only) excluding any Services and any VAT.

Irish Registered Companies

For Irish Registered Companies see:

 VAT3 Return

 Revenue Online Services 

The following is a sample of the Irish Format VAT (Tax) Summary:

Submitting a VAT Return

1. Click Return to close off the VAT (Tax) Return.
   
   

   
   

2. The following values will be captured for audit purposes. Both will be attached to the return as a PDF:
   • Calculated Values: The system calculates these values using data recorded in the system and the system’s VAT rules.
   • Values to Submit: When submitting a return to the HMRC you must copy from the Calculated Values column into the Values to Submit column. This facilitates any adjustment required to the values submitted if you need to allow for a particular VAT rule not supported by the system.
3. Check that the Values to Submit are correct and click Confirm to submit the VAT return to HMRC.
   
   
4. You will receive either a confirmation message with a bundle number and charge reference number or an error message.
   
   
   
   You have the option to save a PDF of the submitted VAT Return for future reference.
   
   The VAT Return Listing screen will now show the return with a status of Submitted.
   
   

Cash Based VAT (Tax) Returns

If you choose a VAT (Tax) Accounting Method of Cash Ireland based or Cash UK based, then the Sales and Purchases tabs will show a list of Receipts and Payments (or in the case of Ireland, Sales Receipts and Purchase Invoices/Credit Notes).

The Tax is calculated on the basis that the Receipt or Payment represents the VAT (Tax) Inclusive amount, which is the Gross amount of the Goods or Services billed. For example, if the Receipt is for £1,000 at a Tax Rate of 20%, then the VAT (Tax) Exclusive Amount is £833.33 and the VAT Amount is £166.67.

Unallocated Receipts and Payments

Unallocated Receipts and Payments will automatically attract the Standard Rate of VAT (Tax). After allocation, the Tax computation will be recalculated to reflect the Rate of Tax on the Invoice they were allocated to. If you include Unallocated Receipts and Payments in a VAT Return and submit it to the Revenue Authorities, an Over-Claim or Under-Payment situation could arise if that Receipt or Payment is subsequently allocated to an Invoice with a different Tax Rate.

In the case of an allocation against multiple Invoices at different Tax Rates, the correct amount of VAT due on the Receipt or Payment will be applied. In this example, both Invoices were in the amount of £250, one with a VAT (Tax) Rate of 23% and the other at 5%:

Adding Notes and Attachments

Notes

On the VAT (Tax) Reporting tab there is a section for notes regarding that Return. These are private notes and will not appear on your VAT (Tax) Return. Enter any notes prior to closing a VAT (Tax) Return.

Attachments

If there is correspondence regarding any of your Returns or any other relevant documentation regarding a particular Return, you can scan and attach it to the listed VAT (Tax) Return:

See:

 How do I Attach Document Images

 How do I Navigate the General Features and Facilities of the System?

Next Steps

Single Entities

UK companies can set up and submit VAT Returns to HMRC via MTD:

 Submit Entity VAT Returns to HMRC Via Making Tax Digital‍ 

Group companies

UK companies can set up an MTD link to submit Group VAT Returns to HMRC:

 Setting up MTD for Group VAT Returns ‍ 

 Submitting Group VAT Returns via MTD‍