Change your VAT Flat Rate Scheme details mid-quarter

This article explains how to change your VAT Flat Rate Scheme details if you want the change to take effect mid-way through a VAT quarter.

If you want the change to take effect from the beginning of a VAT quarter, please follow the steps in this article. Please note that any change in VAT Flat Rate Scheme details must take effect from the first day of a calendar month.

Before you get started

If you run a hospitality or tourism business and need to make a change to your VAT Flat Rate Scheme details that's dated between 15th July 2020 and 31st March 2022, please contact FreeAgent's support team instead of following the steps outlined below.

How to change your details mid-way through a VAT quarter

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 limited cost trader percentage of 16.5%) or because you are switching from the VAT Flat Rate Scheme to the standard VAT scheme or vice versa.

1. Navigate to the relevant VAT return

Navigate to the 'Taxes' tab at the top of the screen and select 'VAT' from the drop-down menu.

Select the relevant VAT return from the list.

2. Set a new period end date for the relevant VAT return

Select ‘Edit details’ in the top-right of the screen.

In the 'Period Ends On' field, enter the day before the date you want the change to take effect. For example, if you want the change to take effect on 1st October 2020, enter 30th September 2020. This will change the end date displayed on the VAT return. Please note that the new end date needs to be the last day of a calendar month.

3. 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. In the example above, the second return would be dated from 1st October 2020.

To adjust this period, select ‘Edit Details’ at the top-right of this new VAT return and in the 'Period Ends On' field, enter the last day of the original VAT quarter. This would be either 31st October or 30th November 2020 in the example above, depending on when the quarter began. Please note that the end date must be the last day of a calendar month.

4. Update your VAT Flat Rate Scheme details on the new VAT return

You can update your VAT Flat Rate Scheme details by choosing your new scheme from the 'Which scheme?' drop-down menu. If you are moving to the limited cost trader percentage of 16.5%, select 'Limited cost trader' from this menu.

Alternatively, select the ‘No’ check box if you’re leaving the VAT Flat Rate Scheme.

5. File a single VAT return for the full quarter to HMRC

HMRC requires businesses to submit a single VAT return for each quarter. Since changing the settings in FreeAgent mid-quarter creates two returns (each using a different VAT scheme's details) it’s not possible to use FreeAgent to file these as a single return. Instead, you will need to combine the figures and file a single VAT return for the full quarter to HMRC outside of FreeAgent.

If you’re filing VAT returns through Making Tax Digital (MTD) you will need to use bridging software to do this. If you’re not signed up for MTD then you should use HMRC’s online portal to file.

For each box on the VAT return, enter the sum of the amounts displayed in the corresponding boxes in the two returns in FreeAgent.

For example, to work out the figure to enter in box 1 on HMRC’s online portal, look at the VAT return that ended on 30th September 2020 in FreeAgent and make a note of the figure in box 1 on that return. Then look at the VAT return that ended on 31st October or 30th November 2020 and make a note of the figure in box 1 on that return. Add these two figures together and enter the total amount in box 1 on HMRC’s online portal or your bridging software. Repeat these steps for boxes 2-9.

6. Mark both VAT returns as filed in FreeAgent

Finally, you will need to mark both VAT returns as filed in FreeAgent.

To do this, navigate to the VAT return that ended on 31st October or 30th November 2020 and select ‘Mark as filed’ at the top-right.

Marking this second return as filed will automatically mark as filed the first VAT return that ended 30th September 2020.

After completing this process, you will be able to file your VAT returns through FreeAgent using MTD for future quarters, though you should double-check the start and end dates of your next VAT return before you do.