I am on the Flat Rate VAT scheme. I have posted expenses net, showing VAT (as advised). After filing the VAT return, my P&L still shows net expenses, mistating them

I'm happy to see you here in the Community, @DdB2.

To verify why your expenses are showing incorrect after filing the VAT return, I recommend contacting our Customer Care Team. They have necessary tools like the remote viewing session that can help review your transactions, determine the root cause of the issue.

To reach them:

1. Click on Help at the top menu bar.
2. Hit on the Contact Us button.
3. Enter a brief description of the issue in the What can we help you with? box.
4. Press on Let's talk.
5. Select on Get a callback.
6. Key in your contact details, then tap on Confirm my call.

Just leave a reply below if you have any other concerns. I'll be around to help you out. Have a good one!

I may not have a technical solution on how you go about dealing with FRS in QBs now, but here is what I did before MTD with "paper filing" online, and my understanding of VAT Flat Rate Scheme.

FRS is meant to simplify VAT Accounting for small businesses that qualify and opted in; however the Financial Accounting should proceed as normal under Standard VAT scheme in compliance with accounting conventions and policies of stating turnover and costs net of VAT. The VAT savings (or additional VAT) from each VAT period is worked out by comparing what you would have paid under Standard VAT accounting and FRS, and credited (or debited if negative savings) to P&L, normally in turnover/sales, as it is the heading that has the biggest share in the make up of VAT entries.

To dramatise the above and translates into accounting transactions, imagine filing VAT under standard scheme, paid the VAT due, but immediately being handed back a certain sum of money from HMRC because you have FRS opted in. On QBs (desktop versions when I did have jobs with FRS), I literally went through the process of filing the VAT on "paper" and posting the full VAT payment to bank, followed by a bank deposit to sales for the amount of VAT saved. This of course was only done after I reverted to pen and paper to work out the actual figures to be filed on HMRC online and paid the correct amount under FRS, thereby allowing me work out the tax savings.

It also makes sense that you should monitor if FRS is actually saving you money, and exactly how much, and take action to leave the scheme if it's no longer beneficial. The only way you can do that is to continue keeping the books as normal under standard VAT scheme right up to the "File VAT Return" stage. I guess under MTD, just need to figure out how to fudge the VAT summary figures for actual filing and post the VAT savings to a relevant P&L account.

Hope the above helps.

You don't claim expenses on FRS unless over £2000. If you'r needing to claim VAT on your expense you will need to select vat reclaimable on the expense. (Small tick box near vat amount) The vat reclaimable box will not show if no vat is selected in the amounts are. Thanks

Hi, Did you ever solve this issue?  I am also having the same issue that the P and L is not accurate if using the flat rate scheme.  Therefore I am exporting data to excel, then amending it with VAT amounts and taking off what I owe the HMRC to get a true picture from the P and L.  This is lots of extra work and not what I had in mind when I signed up to QB online.  I thought it was supposed to make things simple.  Not many people seem to understand the issue because I guess FRS is not so common.  Id love to know if you found any answers. Many Thanks.