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Thread: Quickbooks users and VAT rate increase.

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    Quickbooks users and VAT rate increase.

    The change in the rate of VAT from 1 April is not as simple to implement as what some would like as to believe, especially EasyBiz, who think it as simple as changing the rate in the VAT item list. However, because of the requirements in Section 9 of the Act, most of us will be using both rates for a while still.

    There is also the not so simple matter of an SD14 return that SARS may require when your IT14 return is submitted. If your system cannot separate the transactions at the two percentages then you may well turn grey overnight.

    So then, this is what we suggest to enable this to be dealt with seamlessly, whether you sell and purchase products, services or you manufacture and sell goods.

    1. Control Account
    a. Click Lists, then Chart Of Accounts and scroll down to Other Current Liability.
    b. Locate and rename your VAT control account (usually VAT control) to VAT control (14%). Quickbooks will take a while to implement the change depending on how many entries there are.
    c. Add a new other current liability account and call it VAT control (15%)

    2. VAT Vendor (Supplier)
    a. Your VAT vendor in Suppliers is most probably named SARS or something similar. Edit it so that it is now SARS (14%).
    b. Now add a new Vendor. Name this supplier SARS (15%). Now go to the VAT Settings tab and tick the box “Supplier is a VAT Agency”.
    c. On the VAT Settings tab, the VAT Return field select “VAT 201 (South Africa)”.
    d. VAT Label field type VAT.
    e. Tick the box “Track Sales to” and select VAT control (15%)
    f. Do the same for “Track Purchases to”.
    g. Select “Reporting Period “ and from the drop down and select Invoice basis or Payment basis at the bottom of the screen.

    3. Items
    a. Select Lists, Items.
    b. On the Column Header, click on “Type” so that all items are sorted on Type.
    c. Go down the list to VAT Items.
    d. Double click on the first item, usually Capital Goods Purchases and note the name of the VAT Return Box.
    e. Close the screen. Now right click and select Duplicate Item.
    f. The edit screen will open with the suggested name “DUP Capital Goods Purchases”. I suggest replace the DUP with “15%”.
    g. The VAT Vendor box should reflect SARS (14%). Change it to SARS (15%).
    h. Select the appropriate VAT Return Box from the drop-down list.
    i. Do the same for all VAT items.
    j. Close the items list.

    4. VAT Codes
    a. From the top menu click on VAT and select VAT code list
    b. The list of codes as they presently are will be displayed.
    c. Edit each code. You are allowed 3 characters so we have changed them by preceding the character(s) with a 4, to denote 14%. If your code already denotes 14% then obviously you can leave it alone.
    d. Double click each code so that you can read the “VAT Item for purchases” and the “VAT item for sales”.
    e. Add a new code for each item, we suggest using the same code but precede it with a 5 instead of a 4 and select the Vat items that you created preceded with the 15% in section 3 above.
    f. Do the same for each item.

    5. Processing transactions.
    a. Using your items codes will still produce the same 14% VAT result. However you must select the appropriate new VAT code if in fact it applies.
    b. Once the 14% becomes the minority then change the VAT field in the Item setup. Now it will default to 15% but if you need 14% you just change the VAT code.

    6. VAT Reports
    a. When you select the VAT201 report or the VAT detail report, there is a dropdown box at the top where you must select the appropriate VAT Agency. You should select first the one, then the other.
    b. If you export the report to Excel you can easily add them together.

    7. Inventory items.
    a. You can sell or purchase inventory items and initially select the appropriate code.
    b. Once 14% is out of your system change the inventory codes to default to the 15% VAT Code.
    c. If you have many items them you might want to do a mass import via Excel or IIF, which will only take a few minutes.

    8. Warning.
    a. Any setup changes should be preceded by you backing up or copying your data.
    b. We suggest you do that before each main section, so that means 6 or 7 backups in all.

    9. Inactivation.
    a. Once you are confident that all 14% entries are a thing of the past, you can simply make all unused codes “Inactive”. Right Click and select “Make Inactive”.
    b. You can still use the code or name by typing it; it simply won’t appear in a dropdown.

    If any of this presents a new crisis, please post it here.

  2. Thank given for this post:

    AndyD (19-Mar-18), Dave A (19-Mar-18)

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    Thanks, Andromeda. That worked a treat.

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    Which version of Quick Books is being used here?
    Quick Books Simple Start Version will not allow me to duplicate VAT items in the item list.
    What minimum version is required in order to do the VAT item duplication?

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    Hi Andrew

    I have tested it with 2012, 2014 and 2016. I have not tested with Simple Start.

    If you first create a 2nd VAT Vendor, and allocate the duplicate VAT item to that VAT Vendor, then it should allow it.

    If you don't have a need to have both 14% and 15% active at the same time, and if your VAT periods do not span 1 April, then you can merely change the VAT rate to 15% and all should be well.

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    Thanks for this very helpful recommendation which I have implemented. Just did my first post-change VAT return and the problem I found was in consolidating my returns from the 14% and 15% VAT control accounts in Quickbooks. Basically I have a small refund due on the 14% account (due to a credit note on a prior invoice) and while I have successfully filed both returns in Quickbooks, I don't know how to offset the refund on the 14% control account against the payment due on the 15% control account. Can you help?

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    Just do a journal entry between the two VAT control accounts.

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    VAT control - Clearing Supplier account

    Quote Originally Posted by Dave A View Post
    Just do a journal entry between the two VAT control accounts.
    Hi there - tried that and the listing in Accounts Payable ("Supplier Centre" in QB) doesn't get updated. In the journal there is the option to apply to a specific VAT item but I couldn't see the appropriate item to apply it to.

    From my limited perspective it seems the problem is that VAT control is a bit like an Account Payable and yet handled a bit differently in QB than other suppliers... Any thoughts?

    Warm regards and thanks

    Mish

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    If you have already "filed" VAT then the net effect is in the VAT vendor 14% and VAT vendor 15% in the accounts payable.

    In that case you need to do two journal entries:
    1st Journal
    Debit Accounts Payable Name VAT Vendor 14% with the net VAT on the 14% account
    Credit a Suspense account - it's type you should make an equity account.

    2nd Journal
    Credit Accounts Payable Name VAT Vendor 15% with the same amount
    Debit the Suspense account with the same amount.

    If you have not yet "filed" the VAT, first do so.

  10. Thanks given for this post:

    Dave A (26-Jun-18)

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    Quote Originally Posted by Andromeda View Post
    If you have already "filed" VAT then the net effect is in the VAT vendor 14% and VAT vendor 15% in the accounts payable.
    Of course!

  12. Thanks given for this post:

    MishCoach (27-Jun-18)

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    Thanks again! The journals to the suspense account work fine - except I now see that the truly weird thing is my 14% VAT Vendor filing did not make it into the Accounts Payable. I have a printout of the filing and it clearly shows the net amount - but when I look at the 14% vendor in the Supplier list, or when I run a report on that Supplier, there is a record of VAT being filed as at 31 May, but with a zero amount. Whereas the 15% VAT vendor filing correctly shows the amounts of input and output tax as per the calculations.

    This is so weird! I noted that after I did the first filing, I got the warnings about closing off the period to end May, and I wonder if that somehow zeroed out the 14% account at the same time, even though the printed report made at the time of filing was not zeroed out....

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