[UK] Set up Wave to track VAT

SystemSystem Posts: 270 admin

image[UK] Set up Wave to track VAT

Disclaimer
The explanations and advice in this article are based on Wave’s understanding of relevant HMRC publications. While we’ve taken reasonable care in researching and preparing this article, ...

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edited April 28, 2019 in Help Center Discussion

Comments

  • patpending74patpending74 Member Posts: 9

    Hi,
    Thanks for this post, very helpful.
    For some reason the Taxable Amount is showing as zero in Reports for EC Services - Zero rate (standard rate is showing fine) Any idea why?
    I also trade (services) with businesses based in non EU countries where VAT should be zero rated, how should I go about this?

    Thank you!

  • JamieDJamieD Administrator Posts: 1,117 admin

    Hey @patpending74 ! If possible, could you please include a few screenshots here --one of the example transactions with the tax applied, as well as the tax settings page just to make sure that everything is setup correctly .. this would be super helpful in determining what exactly is going on here.

  • patpending74patpending74 Member Posts: 9

    Hi @JamieD

    Thanks for getting back to me.

    My mistake I had the dates set incorrectly!

    The second part of my question still stands though:

    I also trade (services) with businesses based in non EU countries where VAT should be zero rated, how should I go about this?

    Thanks you,

    Mark

    edited May 17, 2019
  • JOHNRJOHNR Member Posts: 4

    How do I record VAT I have paid for imports so that it is recorded on the VAT report and reclaimed.
    Thanks
    John Russell

  • SamdSamd Administrator Posts: 560 admin

    Hey @patpending74 - you should still be able to go about this the way you would adding a regular sales tax. You'd just head to Settings > Sales Taxes, and generate a non-EU tax rated zero, which you could apply to the relevant transactions.

    @JOHNR You should be able to apply this tax to the expense transactions associated with these imports, which should offset the amount owed by the amount which you're claiming. Let me know if this gives you any trouble though or the reports don't appear to calculate appropriately.

  • simonssimons Member Posts: 5

    How do I set up a flat rate VAT scheme? I have to show VAT of 20% on invoices, but I only have to pass on 11% to HMRC.

  • ZoeCZoeC Administrator Posts: 389 admin

    Hey @simons, If I understand correctly, you are collecting VAT at a 20% rate, but you are only required to remit 11% of the total amount you collect. If so you will need to set up VAT at a 20% rate, and apply that to relevant invoices. On your books, your total VAT liability will include the amounts that you have collected at the 20% rate, but you won’t have to pay all of that. Once you figure out what 11% VAT would’ve been (as in, once you know how much you actually need to remit under an 11% VAT rate), you can record the remittance by categorizing the remittance against the VAT liability. This won’t fully clear out the VAT liability though, so you'll then need to add in an adjustment where you debit VAT liability to zero out the balance, and credit “VAT Flat Rate” income category (if you don’t have this category, you can add it in) for the same amount.

    I hope that helps and as always we highly recommend reaching out to your accountant for advice on these things too! :smile:

  • benny_szebenny_sze Member Posts: 1

    Is their an option for tax used in the MOSS scheme? e.g. Selling digital goods to EU.

  • AlexLAlexL Administrator Posts: 1,118 admin

    Hey @benny_sze . There is no option for tax used in the MOSS scheme. My best advice would be to consult your accountant to see how to handle this with either workarounds, or with a different system.

  • MerlinAccounts_UKMerlinAccounts_UK Member Posts: 177 ✭✭✭

    @Zoe_caff said:
    Hey @simons, If I understand correctly, you are collecting VAT at a 20% rate, but you are only required to remit 11% of the total amount you collect. If so you will need to set up VAT at a 20% rate, and apply that to relevant invoices. On your books, your total VAT liability will include the amounts that you have collected at the 20% rate, but you won’t have to pay all of that. Once you figure out what 11% VAT would’ve been (as in, once you know how much you actually need to remit under an 11% VAT rate), you can record the remittance by categorizing the remittance against the VAT liability. This won’t fully clear out the VAT liability though, so you'll then need to add in an adjustment where you debit VAT liability to zero out the balance, and credit “VAT Flat Rate” income category (if you don’t have this category, you can add it in) for the same amount.

    I hope that helps and as always we highly recommend reaching out to your accountant for advice on these things too! :smile:

    I'd be inclined to say that you mark the 20% vat (sales tax) as non recoverable, and then just total up your gross sales for the quarter, apply the FRS rate, and then journal that as a credit to the VAT liability account and as a debit to your Profit/Loss account - I suggest you create an account called Flat Rate VAT perhaps as an expense. When you settle with HMRC you categorise the payment to the liability account you credited the liability to.

    For MTD for VAT reporting you could actually set up a spreadsheet to show your calculation of your vat and then use bridging software linked to this to file your return.

    I'm not wholly certain of a way that we can get the VAT 100 reports to work correctly within Wave to achieve this, but if I think of how I'll let you kknow.

  • SystemGuySystemGuy Member Posts: 1

    In India we need to charge 2 different vat (CGST 6% AND SGST 6 &) in a single bill. However in wave you gave only 1 vat field. How do we setup 2nd field?

  • EmmaPEmmaP Administrator Posts: 270 admin

    Hi @SystemGuy! You can add taxes from: Settings > Sales Tax in your Wave account and apply these taxes to your bills or invoices. I have included an example for adding more than one tax to an item on an invoice below, but you can do the same on a bill!

    Adding taxes to an invoice

  • eve1985eve1985 Member Posts: 3

    Hi, I have recently completed my UK self assessment tax return, and made a payment to the government for the amount owed. This payment is now showing up in my transactions - how do I properly categorise this payment? I don't pay VAT or have employees, and work on the acrual basis. I've not done this before as it's my first tax return, so easy to follow step by step instructions as to what to do would be appreciated!
    Thanks!

  • ConnorMConnorM Member, Administrator Posts: 193 admin

    Hey @eve1985! I'm thinking that the best bet here would be for you to reach out to a local tax professional in order to figure out best practice for accounting for that income tax payment. However, my best guess in Wave would be to create a liability account in order to have this income tax payment accounted for!

  • covflyercovflyer Member Posts: 8

    Hi all.

    So I've submitted my VAT return and have received a refund. Let's say it's £100. Can someone please walk me through how I record this in Wave?

  • eve1985eve1985 Member Posts: 3

    Thanks Connor! I was hoping to avoid going to an accountant just to categorise that one payment, so if anyone else knows anything about this, any advice would be much appreciated - I'm sure every small business in the UK has to do this too when they pay their tax, so I'm hoping someone out there must know what to do!

  • BarsinABarsinA Administrator Posts: 512 admin

    Hey there @covflyer

    When you create an income in your transactions page, our system has an automated Sales Tax Refund from the Government. See my image below!

    Let us know if you have any issues with this!

  • AlexLAlexL Administrator Posts: 1,118 admin

    Hey @eve1985 . I've merged your post into this thread which should have an answer for you :smile:

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