To record transactions with a VAT rate that is outside the standard 0%, 5% or 20% UK VAT rates, for example, business Insurance Premium Tax, Professional Indemnity insurance or Employer Liability insurance, please follow the below workaround to make an adjustment to your VAT return at the time of submission.
Example
- Gross price of insurance: £1000
- IPT VAT RATE: 12%
- Net price: £892.86
- Tax amount: £107.14
Business Finance Assistant doesn't support non-standard UK VAT rates, so please follow the steps below to record the IPT transaction and then make adjustments to the VAT return:
- Go to your Bank Transactions page
- Create a new category with the parent category 'Taxes' for VAT Payable: How can I add or customise the categories?
- Categorise the insurance expense
- Add the supplier information
- Apply Zero Rate 0% VAT - You may need to enable more VAT rates: UK VAT rate guide
- Press the 'Justify' button from within the bank transactions to attach a copy of the receipt
- Press 'Confirm'
To make adjustments to your VAT return:
- Go to the VAT return page
- Press 'Preview VAT return'
- Press the 'Adjust' button and check HMRC guidelines for advice on which box to adjust
- Calculate and input the adjustment:
- Enter the reason for the adjustment in under 200 words such as 'Business Finance Assistant supports standard UK VAT rates and this adjustment records the actual 12% IPT VAT'
- Preview the details of boxes 1–9
- Carefully read each disclaimer box on the right and tick them off when completed