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VAT

Shinjinee Sarkar
  • Updated

VAT Settings

The VAT settings govern how VAT is applied to the business accounts. For example, you can set VAT rates. To view the steps to set up VAT, click on the links below.

VAT Basis  

The VAT Basis settings in BrightBooks allow you to customize how your VAT calculations and reporting are handled. This section contains several key configuration options:

Sales and Purchases Basis

Sales: Choose between Cash or Invoice basis for VAT calculations on sales transactions
Purchases: Select either Cash or Invoice basis for VAT calculations on purchase transactions

Reporting Periods

VAT Reporting Period: Define your VAT return frequency by selecting from available periods (1, 2, 3, 4, 6, or 12 months)
VIES Reporting Period: Choose between monthly (1 month) or quarterly (3 months) reporting for VIES returns

RTD Reporting

You can choose your RTD Reporting for either VAT Return Periods or Open Periods through the dropdown

 

Create the VAT RTD (Return of Trading Details) from BrightBooks

You can generate the RTD from BrightBooks once the VAT Return for that period exists.

Steps:

  • Ensure the VAT Return covering the RTD period has been created (General Ledger > VAT Return > New > Save/Close as needed).
  • Go to Reports > RTD Report.
  • Select the required period and run the report.

Why an invoice may not appear on the RTD:

  • If you run the RTD by VAT Period, only transactions included on a VAT Return appear. If an invoice has not yet been included in any VAT Return, run the RTD based on Open Periods to include it.

Resale vs non-resale on RTD:

  • The resale designation is set on the nominal code, not the VAT code. Edit the nominal (chart of accounts) and tick the resale option where applicable. Individual VAT codes cannot be flagged as resale.

Your VAT calculations and reporting will be processed according to the combination of settings you save. To apply your configuration, select your preferred options from each dropdown and click the Save button. You can modify these settings at any time by clicking Cancel and selecting different options.

VAT Rates

Note: For RCT businesses, system-enabled VAT Codes would not be enabled for deletion.

To configure various VAT rates, complete the following steps.

1. On the Settings page, under the VAT heading, click VAT Rates.

2. The VAT Rates window appears. To set VAT rates, click Add or to update VAT rates, click Edit.

 

Please note, if you have a user-defined VAT Rate which uses 20% etc, it can be applied to both the Invoice and Payment and when the allocation is complete, the 20% VAT will be accounted for.

 

Correcting RCT Allocation Issue

If you experience issues with RCT allocation, you need to ensure that the VAT Rate for the receipt is set to RCT 0%. When you navigate to the Allocation screen for this receipt, you should have the option to select the desired RCT percentage from the RCT dropdown located at the top left of the allocation screen.

 

Setting Notional VAT Rate

A notional VAT rate allows you to pay the VAT at first and reclaim the VAT later from the Revenue. To set up the notional VAT rate, complete the following steps.

1. On the VAT Rates window, select a rate and click Edit.

2. The Edit VAT window appears. From the NOTIONAL RATE list, select a notional rate and in the GOODS OR SERVICES list, select an option.

3. To save the rate, click Save.

 

Please note that the 2/3 VAT Value is not supported on BrightBooks. 

 

E-commerce and one-stop-shop (OSS)

This section allows you to enable One Stop Shop sales in BrightBooks.

Configure OSS for an existing record

  1. Click Settings > Vat > Vat Rates.
  2. Select an existing record and click Edit.
  3. Select the OSS Enable checkbox.
  4. Select the country from the COUNTRY drop-down.
  5. Click Save.

Configure OSS for a new record

  1. Click Settings > Vat > Vat Rates.
  2. Click Add and enter all the information.
  3. Complete steps 3 to 5 as mentioned in Configure OSS for an existing record.

VAT Codes

Setting a Default 0% VAT Rate for a Supplier

To set a default 0% VAT rate for a supplier in BrightBooks, follow these steps: Go to the supplier's record and open the Invoice Settings tab. Under Default VAT Code, select the desired VAT code you want to set as default for supplier invoices.

Changing the country of suppliers can have implications on how VAT is reported. While changes do not retroactively affect existing invoices, they influence how future transactions are accounted for in VAT returns. Ensure that any such changes align with your reporting requirements and are limited to future transactions unless corrections are needed for previous records.

This section allows you to set up the VAT for your business. To set up, complete the following steps.

To ensure VAT codes are correctly applied on your VAT returns, verify your settings for each code. Ensure your VAT rates and codes reflect the correct notional rates, especially when dealing with EU transactions. For zero-rated transactions, ensure you use appropriate codes like creating a new code specifically for EU goods or services. Make sure your supplier and customer country codes are accurately entered to reflect correct VAT treatments. If you encounter postponement accounting issues, ensure the correct VAT rate is flagged with the applicable notional rate.

 

1. On the Settings page, under the VAT heading, click VAT Codes. The VAT Setup page appears.

2. On the VAT Setup page, select the appropriate VAT rate for different cases and click [Save] to save the changes.

  
If, at the time of setting up the business, you select options Primary School or Secondary Schools, 
then the default values in the fields Default VAT Code for Customer and Default VAT code for Supplier will be Z 0%.

VAT Change Wizard

The VAT Change Wizard is a feature that helps you update your VAT Rates, in accordance with the temporary standard VAT rate change currently in Ireland. The feature allows you to select the types you want to change to 21% or set it back at 23%. To process, complete the following steps.

  1. On the Settings page, under the VAT heading, click VAT Change Wizard.
  2. The VAT Change Wizard page opens. Select options that need to be changed from 23% to 21% charge.
  3. Click Run. Changes get saved and is shown under From 21% to 23%.
  4. The changes can be reverted back by checking the required options and clicking Run.
  5. Changes are reverted back.

Change VAT Basis

This new feature will allow you to change the VAT basis, from Cash to Invoice or vice-verse, where VAT Returns have already been made to Revenue/HMRC under a previous Basis.

  1. On the Settings page, under the VAT heading, click Change VAT Basis.
  2. You can change the Sales VAT Basis and/or the Purchase VAT Basis from Cash to Invoice or vice-versa. Select the relevant change and click Save.
  3. A confirmation message is displayed that states the changes being made.

  4. Click Yes to proceed with the change.


    Validation

    Invoice Basis to Cash Basis

    You will see a validation message, where there are part-allocated receipts or payments to an Invoice already included in VAT returns. The unallocated portion cannot be automatically included in future returns.

    To ensure that these transactions are included in future returns you should unallocate them.

    A list of these transactions will appear on the screen, you can export the list of transactions to be unallocated to Excel, by using the 'Excel' button. Until these changes are made you will not be able to change your VAT Basis.

     

    Cash Basis to Invoice Basis

    You will see a validation message, where there are part-allocated receipts or payments included in VAT returns, the unallocated portion will not be included in future returns.

    You will need to make a manual adjustment in the next return to include these transactions. The list of affected transactions will be displayed, you can export the list of transactions to Excel, by using the Excel button.

     

  5. Click Agree and Proceed to change the VAT basis.

     

 

VAT Calculation

 

You can select if you want to calculate your Gross amount from Net or your Net amount from Gross on your Quick Invoices/Credit Notes, Payments, and Receipts. To change these settings, follow the steps below:

 

  1. On the Settings page, under the Accounts heading, click Setup.
  2. Here you will see options to choose the calculation for Quick Invoice/Credit Notes, Payments, and Receipts.
  3. Once selected, click save.