VAT change and Quickbooks. Please help me!!!
Discussion
Help!!
What's the best way to deal with the [temporary] VAT change in Quickbooks?
Here's how we do things at the moment:
Customers are given a price ex VAT, so that's not a problem, BUT the majority of our customers pay by DD at the beginning of each month. It's too late for me to change the DDs, so I can't adjust them until after 3rd December once all the money has been collected through the banks and is in the system to be paid to us. That's not a problem, I'll put through a single DD in January to take the new price minus what they've already overpaid for December and their ongoing DD will be the same amount from February onwards.
However, I don't know what is the best way to change the VAT in Quickbooks:
1. If I change the standard tax rate from 17.5% to 15%, everytime we look at a transaction raised before 1st December it will adjust the VAT, which will make the receipts against invoices wrong.
2. If I set up a new VAT rate for the 15%, I've got to change every single item to pick up the new VAT rate and I can't do that until Monday morning when we've finished invoicing November. Or is there a default option? I looked on the Help, but it's not much help. Also if I change the defaults, won't I have the same problem with historic transactions?
3. Or shall I just set a new company, which means I won't have the customer and supplier history and I'll have to run two VAT returns because our quarter finished on 31/10/08. Oh, and our financial year ends on 28/02/09, so what will the implications of setting up a new company be to our year end figures?
Whichever option I choose, I'm going to have to do it all again next year when the new VAT of 20% is implemented (there's no way he'll put it back to 17.5%, the pillock has bills to pay!)
If anyone knows an easy way of doing this, please tell me because I seem to be going round in circles racking my brain for a solution that continues to be useable on historic transactions.
What's the best way to deal with the [temporary] VAT change in Quickbooks?
Here's how we do things at the moment:
Customers are given a price ex VAT, so that's not a problem, BUT the majority of our customers pay by DD at the beginning of each month. It's too late for me to change the DDs, so I can't adjust them until after 3rd December once all the money has been collected through the banks and is in the system to be paid to us. That's not a problem, I'll put through a single DD in January to take the new price minus what they've already overpaid for December and their ongoing DD will be the same amount from February onwards.
However, I don't know what is the best way to change the VAT in Quickbooks:
1. If I change the standard tax rate from 17.5% to 15%, everytime we look at a transaction raised before 1st December it will adjust the VAT, which will make the receipts against invoices wrong.
2. If I set up a new VAT rate for the 15%, I've got to change every single item to pick up the new VAT rate and I can't do that until Monday morning when we've finished invoicing November. Or is there a default option? I looked on the Help, but it's not much help. Also if I change the defaults, won't I have the same problem with historic transactions?
3. Or shall I just set a new company, which means I won't have the customer and supplier history and I'll have to run two VAT returns because our quarter finished on 31/10/08. Oh, and our financial year ends on 28/02/09, so what will the implications of setting up a new company be to our year end figures?
Whichever option I choose, I'm going to have to do it all again next year when the new VAT of 20% is implemented (there's no way he'll put it back to 17.5%, the pillock has bills to pay!)
If anyone knows an easy way of doing this, please tell me because I seem to be going round in circles racking my brain for a solution that continues to be useable on historic transactions.
Eric Mc said:
This is the very first time Standard Rate VAT has changed since the introduction of Quickbooks into the UK (it's originally an American product). Have you tried QBs help line?
No I haven't. I saw your name and thought "Yes, here's Eric, he'll know the answer 
"Bumcakes. It looks like it's not going to be an easy fix
Sage is fairly straightforward. Just set up a code T2 and designate it as the 15% rate. Just make sure you use the T2 code for transactions after 1 December. Old stuff will remain unaffected.
I wouldn't get rid of the T1 17.5% rate as you may still be receiving expenditure invoices for processing after 1 December which are dated 30 November or earlier and will show the 17.5% rate.
I am not that clued up on QB. I would suggest that you get in touch with them pronto to see what they are suggesting - especially if any of you are putting together QB VAT Returns using the Cash Accounting option.
I wouldn't get rid of the T1 17.5% rate as you may still be receiving expenditure invoices for processing after 1 December which are dated 30 November or earlier and will show the 17.5% rate.
I am not that clued up on QB. I would suggest that you get in touch with them pronto to see what they are suggesting - especially if any of you are putting together QB VAT Returns using the Cash Accounting option.
Edited by Eric Mc on Tuesday 25th November 15:36
Zen. said:
So in QB if you go to
Report, List, VAT Code, change the standard rate to 15% it does not change any historical invoices.
No, it doesn't change them, but if you edit an invoice (like amend a spelling mistake or something) and don't remember to manually overwrite the (correct VAT @ 17.5%) on historical invoices, it recalculates it at 15%, which means your receipts against invoices will be wrong - i.e. the customer will be showing a credit instead of zero balance.Report, List, VAT Code, change the standard rate to 15% it does not change any historical invoices.
It's not a problem for me, but I can see it causing problems if anyone else decides to "put things right".
Just been looking on the QB website.
Looks like things are easier in the latest version of QB (2008) since they have changed VAT considerably since my version (Regular 2006).
As was pointed out earlier, you can simple change the S rate to be 15% on Monday and all future invoices will be fine.
When entering Payables invoices with 17.5% you can simply overtype the VAT with the correct amount.
The only problem appears to be if you edit an Invoice. Since this is something I'd never do, it's not a problem for me.
For those in the habit of editing Invoices, you will need to change the S rate back to 17.5% before making the changes (and remember to change it back afterwards!) or look at upgrading to 2008, where you can overkey the VAT amount calculated on the Invoice.
In practice as a Financial Systems Consultant, I'd advise my customers that making changes to existing invoices is bad practice anyway.
In any case, should anyone need to raise a Credit note for goods/services supplied prior to the rate change then the Standard VAT code change workaround mentioned above looks to be the only way to get the VAT correct in pre QB2008.
Simon
Looks like things are easier in the latest version of QB (2008) since they have changed VAT considerably since my version (Regular 2006).
As was pointed out earlier, you can simple change the S rate to be 15% on Monday and all future invoices will be fine.
When entering Payables invoices with 17.5% you can simply overtype the VAT with the correct amount.
The only problem appears to be if you edit an Invoice. Since this is something I'd never do, it's not a problem for me.
For those in the habit of editing Invoices, you will need to change the S rate back to 17.5% before making the changes (and remember to change it back afterwards!) or look at upgrading to 2008, where you can overkey the VAT amount calculated on the Invoice.
In practice as a Financial Systems Consultant, I'd advise my customers that making changes to existing invoices is bad practice anyway.
In any case, should anyone need to raise a Credit note for goods/services supplied prior to the rate change then the Standard VAT code change workaround mentioned above looks to be the only way to get the VAT correct in pre QB2008.
Simon
Found more on the QB forums.
There are several suggestions, I like this one best (so far).
Create a new VAT code S17 (name immaterial), with a % of 17.5
IF you need to change an exising Sales Invoice (or need to create a Credit Note etc) then simply change (or enter CN line as) the line's VAT Code to be S17.
The existing S code can be changed to 15% so that you don't need to change lots of items etc.
There are several suggestions, I like this one best (so far).
Create a new VAT code S17 (name immaterial), with a % of 17.5
IF you need to change an exising Sales Invoice (or need to create a Credit Note etc) then simply change (or enter CN line as) the line's VAT Code to be S17.
The existing S code can be changed to 15% so that you don't need to change lots of items etc.
Plotloss said:
Eric, in Sage would you recommend creating a new temporary VAT rate of something like T99 at 15% or amending the T0/T1 (Cant remember which one it is off the top of my head) rate?
The Sage recommendation is to change the T1 vat rate to 15%, otherwise you would have to manually change each customer/supplier default vat rate. (PITA)Eric Mc said:
Sage is fairly straightforward. Just set up a code T2 and designate it as the 15% rate. Just make sure you use the T2 code for transactions after 1 December. Old stuff will remain unaffected.
I wouldn't get rid of the T1 17.5% rate as you may still be receiving expenditure invoices for processing after 1 December which are dated 30 November or earlier and will show the 17.5% rate.
There is a page on the Sage website with suggestions for how to deal with the change in VAT - they suggest changing the T1 code to 15%, so I suppose you could set up a spare tax code at 17.5% for old invoices?I wouldn't get rid of the T1 17.5% rate as you may still be receiving expenditure invoices for processing after 1 December which are dated 30 November or earlier and will show the 17.5% rate.
This stuff is a real headache.
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