VAT for United Kingdom

VAT - Value Added Tax. According to HMRC, VAT is a tax that is charged on most goods and services that VAT registered businesses provide in the UK. It is also charged on goods and some services that are imported from countries within and outside the European Union (EU).

You need to create a New Organisation and choose the UK edition to make use of this feature.


VAT Settings

To start setting up your VAT in Zoho Books, navigate to Gear icon > VAT and check the VAT Registration box.

If your business is VAT registered, HMRC would provide you with a certificate containing the VAT details for your business. Enter the details from your HMRC certificate into the VAT settings page in Zoho Books.

VAT settings

Field name Description
VAT Registration Number Registration number provided for your business by HMRC.
Reporting Period Select either Monthly or Quarterly as provided in your HMRC certificate.
VAT Reporting Period
Generate First VAT Return From Select the date from which the first VAT return will be generated.
VAT Period Group This option is available only if the Reporting Period is chosen as Quarterly.
Select the VAT period group from the accounting period assigned to your by HMRC. Once this is selected and the date for generating the first VAT return is also provided then the first VAT return with the period will be automatically calculated by Zoho Books.

How is the first VAT return created then?
The first VAT return is created from the date you selected in the Generate First VAT Return From field till the date on which VAT period group ends.
International Trade Check this box to enable trade with customers outside the UK.
Once international trade is enabled, Zoho Books will take care of the Acquisition VAT and Reverse Charge Handling in transactions. This will be recorded in the European Commission (EC) Sales List Report which will be available in the Taxes section under Reports.
If you are registered for VAT MOSS, then check the Registered for VAT MOSS box. To know more about VAT MOSS, Click Here
Use Flat Rate Using Flat Rate, you just pay a fixed percentage of your VAT inclusive turnover. Check the Use Flat Rate scheme for VAT option to enable flat rate scheme for your business. This option is provided by HMRC to ease out the VAT accounting difficulties.

Click Here to read about the pros and cons of using flat rate for your business.

Enabling Flat Rate

If your business has a VAT taxable turnover less than GBP 150,000, VAT accounting is simplified by calculating your VAT payments as a fixed percentage of your total VAT inclusive turnover. The fixed percentage depends on the type of business you operate.
Click Here to check the flat rate percentage for different types of business provided by HMRC.

To enable flat rate, check the Use Flat Rate scheme for VAT box.

Enabling Flat Rate scheme in VAT

Fields Description
Flat Rate Enter the appropriate percentage based on the category of your business.
Flat Rate for Pre-Dated Transactions If a change in flat rate is anticipated from a defined date which you wish to apply for your business, enter the Date and the new Flat Rate percentage.

Note: VAT cannot be reclaimed if flat rate scheme is enabled.

Example:

VAT Calculation Example
Normal VAT Calculation 3 Items sold at GBP 100 each.
1st Item: 20% VAT
2nd Item: 20% VAT
3rd Item: 20% VAT

Total Sales inclusive of VAT: GBP 360
VAT: 20 + 20 + 20 = GBP 60
Flat Rate VAT Calculation 3 items sold at GBP 100 each.
1st Item: 20% VAT
2nd Item: 20% VAT
3rd Item: 20% VAT

Total Sales inclusive of VAT: GBP 360
Flat Rate = 14%
VAT = 14% off360 = GBP 50.40

Adding New VAT Rate

To create or add a New VAT rate, follow the steps below:


Edit VAT Rate

To edit an existing VAT rate, follow the steps below:

Edit tax

Update Tax Rate


Delete VAT Rate

To delete an existing VAT rate, follow the steps below:

Delete tax


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