If you ever need to change your VAT flat rate scheme details in the middle of a VAT quarter, here are the steps to follow in FreeAgent.
You may need to make changes to your VAT flat rate scheme status because you are moving from one scheme to another (e.g. if you are moving from a trade scheme to the new limited cost trader percentage of 16.5%, which comes into effect on 1st April 2017) or because you are switching from the flat rate scheme to the standard VAT scheme or vice versa.
If you want the change to your flat rate scheme status to take effect from a VAT quarter start date, please follow the instructions outlined in our article on checking, editing and locking a VAT return.
If you want the change to take effect from a date that falls mid-way through a VAT quarter, you will need to complete the following steps to file your VAT return for that quarter.
1. Set a new period end date for the relevant VAT return
Navigate to ‘VAT’ and select the relevant VAT return from the list. Select the ‘Edit details’ button on the return and enter the day before the date you want the change to take effect as the period end date. If you want the change to take effect on 1st April 2017, for example, enter 31st March 2017. This will change the end date displayed on the VAT return to the new date that you typed in.
2. Adjust the period end date of the new VAT return that FreeAgent generates
FreeAgent will automatically generate another VAT return which will be dated from the day after the new period end date you entered earlier. In the example above, the second return would be dated from 1st April 2017. Select the ‘Edit details’ button on that VAT return and enter the last day of your current VAT quarter (this would be either 30th April or 31st May 2017 in the example above) as the period end date.
3. Update your flat rate scheme details on the new VAT return
Update your flat rate scheme details in this section, either by choosing your new scheme from the drop-down menu or checking the ‘No’ checkbox if you’re moving away from the flat rate scheme altogether. If you are moving on to the new limited cost trader percentage of 16.5%, select 'Limited cost trader' from the 'Which one?' drop-down menu.
4. File a single VAT return for the full quarter to HMRC
Now you need to file a single VAT return for the full VAT quarter by using HMRC’s online portal. For each of the boxes on the VAT return, enter the total amount that’s displayed in the corresponding boxes in the two returns in FreeAgent.
For example, to work out the figure that you need to enter in box 1 on HMRC’s online portal, look at the VAT return that ended on 31st March 2017 in FreeAgent and make a note of how much was in box 1 on that return. Then look at the VAT return that ended on 30th April or 31st May 2017 and make a note of how much was in box 1 on that return. Add both these box 1 figures together and enter the total amount in HMRC’s online portal. Repeat these steps for boxes 2-9.
5. Mark both VAT returns in FreeAgent as filed
Finally, mark both the VAT returns that cover the full quarter as filed in FreeAgent. To do this, select the ‘Unfiled’ button that appears at the top of each of the VAT returns and then select ‘Mark as filed’ from the drop-down menu.
After completing this process for the current quarter, you will be able to file your future VAT returns through FreeAgent as normal - but it’s a good idea to check the start and end dates of your next VAT return before you get started.