Here we explain how to input your business's VAT settings when you first start using FreeAgent. You may have entered some of this information when you set up your FreeAgent account.
To begin, navigate to 'Settings' and choose 'VAT Registration'.
If you can't see this option, it means you don't have access to the VAT registration area of FreeAgent, and you'll need to talk to your accountant or whoever set you up as a FreeAgent user.
Selecting a VAT registration option
By default, all new businesses in FreeAgent are set up as 'not registered for VAT' in the first instance. Depending on your business's VAT registration status, you'll need to follow one of these sets of steps:
If your business is not registered for VAT
If your business isn't registered for VAT and you're not currently waiting to hear the outcome of an application to register, leave the VAT status as 'Not Registered'.
If you need to report VAT MOSS transactions, select 'Yes' in the 'Do you trade with other countries in the EU?' area.
If you've applied for VAT registration
If you've applied for VAT registration for your business, choose 'Registration Applied For' from the drop-down menu. Enter the date you expect to be registered from and FreeAgent will start adding VAT to the price of items on any new invoices that you create with dates on or after that date. This is to ensure that customers pay you the full amount.
When your VAT registration number arrives, you'll need to return to the VAT Registration page in FreeAgent and complete the following steps:
- Change your registration status to 'Registered'.
- Provide the additional information required, including the correct VAT registration effective date.
- Review any invoices that you issued to your customers while you waited for your VAT registration to come through, and then edit and re-issue those invoices. Doing this will give your customers valid VAT invoices that they can use to claim back the VAT you have charged them. If you wish, you can send these invoices via email in FreeAgent and include a note to explain to customers that the second invoice is for their records and that they don't need to pay the same invoice twice.
If your business is already VAT-registered
If your business is already registered for VAT, choose 'Registered' from the drop-down menu and enter the additional details - see below for more information on how to do this.
Using the same VAT number?
If the new company is taking over the same VAT number, the new ‘Effective Date of VAT Registration’ will also be the new ‘Company Start Date’ which is found under ‘Accounting Dates’ in your ‘Settings’.
Providing your VAT registration details
When you choose the 'Registered' option from the VAT status drop-down menu, you'll be asked to provide some additional information about your VAT registration.
First of all, enter your VAT registration number. This is a compulsory field because your VAT registration number must be printed on your invoices.
Next, enter the date your business's VAT registration became effective. This will enable FreeAgent to use the correct dates for any pre-registration bills you incurred during the period between setting your business up in FreeAgent and your VAT registration effective date.
Enter the date that your first VAT return period ended. This is the date you prepared your business's very first VAT return to, not the date you're preparing your first VAT return in FreeAgent to (although these dates may be the same). FreeAgent will automatically date your next VAT return to finish three months after the date you enter here.
Select the relevant VAT accounting basis from the drop-down menu. If you're cash accounting for VAT or using the cash basis on the VAT Flat Rate Scheme, choose 'Cash' from the drop-down menu. If you're invoice accounting for VAT or using the standard method of the flat rate scheme, choose 'Invoice' from the drop-down menu.
If your business is using the VAT Flat Rate Scheme, select 'Yes' next to 'Are you on the Flat Rate Scheme?'. If your business is not accounting for VAT using the Flat Rate Scheme, select 'No' instead. You will know if your business is using the Flat Rate Scheme because you have to apply to HMRC to join this scheme and be accepted before you can use it. This is different from registering for VAT or registering to use the VAT online filing service. Please note that you can edit this information on individual VAT returns if your VAT scheme changes or you stop using the Flat Rate Scheme
If your business is accounting for VAT using the Flat Rate Scheme, select the relevant sector from the drop-down menu. If you qualify as a limited cost trader, be sure to choose this option from the menu - instead of the sector you work in- from 1st April 2017.
When you're happy with all the information you've entered, select 'Save'.
Pre-registration purchase period
You can change how far back you would like to look back for your pre-registration purchases.
Making changes to your VAT settings
How to unlock your VAT settings
If you’ve filed any VAT returns directly to HMRC using FreeAgent, you’ll need to contact our support team directly at email@example.com.
However, if you’ve manually marked a VAT return as filed but didn’t file it directly to HMRC using FreeAgent, it will lock your VAT settings. Here’s how to unlock your VAT settings:
Please note, when you select 'Mark as unfiled' after marking your VAT return as 'Filed', it will destroy any automatic corrections FreeAgent has made to your locked transactions.
1. Navigate to the 'Taxes' tab and select 'VAT'.
2. Select the earliest locked VAT return. A VAT return is locked if it has a small padlock icon on the right-hand side of its row.
3. Next, select the green 'Filed' button, just above the 'VAT period dates' section and choose 'Mark as unfiled'.
That’s it! Navigate back to your VAT settings and they should be unlocked and editable.
Editing your information on the VAT registration page
Once you've filed your first VAT return, some of your settings on the VAT registration page will be locked, but you will still be able to update your VAT registration status. If you de-register your business for VAT at any stage, follow these steps to update your settings in FreeAgent.
You will also be able to enable or disable EC VAT reporting once you've filed your first VAT return.
Editing your settings on individual VAT returns
You can change the following information in each individual VAT return:
- the VAT period end date of that particular VAT return
- your accounting basis (cash or invoice)
- your VAT flat rate scheme status and sector if this has changed after initial registration
When FreeAgent generates a new VAT return for you it copies the settings from your last return on your account. Therefore, if you change any of these settings on your latest VAT return, FreeAgent will automatically apply the new settings to your future VAT returns.
Change your default VAT return period length
Follow these steps to select your new VAT return length - either monthly, quarterly or yearly. However, please be aware that changing this setting won’t affect historic VAT returns, only future VAT returns.