Understanding VAT Groups for Efficient Tax Management

NOTE: This is only available for connected accounting customers within the UK excluding Xero.

This article serves as a guide for configuring and using VAT Groups in our system, a feature that's exclusive to our UK customers. VAT Groups streamline the tax management process by allowing you to input VAT types and codes at various levels within your company, thus simplifying invoice creation and improving the accuracy of your VAT reporting. Whether you're an enterprise with complex portfolios or an SMB, this feature can enhance your financial handling.

Who Benefits from VAT Groups?

Specifically designed for the UK market, VAT Groups are particularly beneficial for:

• Enterprise Customers: Larger businesses with existing accounting integrations will find VAT Groups a powerful tool to handle their complex tax matters.
• SMBs and Mid-Market Entities: Small to mid-sized companies can also take advantage of this feature, with the flexibility to toggle it on and off as needed.

With this feature, you can assign default VAT codes and types at the company level, and refine settings down to individual owners, property groups, properties, and areas. This hierarchical approach ensures the most relevant VAT code is automatically suggested when you're creating line items for income and expense invoices.

The VAT Hierarchy Process

The system uses a pre-defined hierarchy to determine the most suitable VAT code for your income & expense invoices. This framework ensures the most accurate VAT code is used, minimizing manual adjustments and the potential for errors. You can always change what VAT code is used.

Setting Up Your VAT Groups

Enable VAT Groups 

1. Navigate to settings.
2. Under Accounting, select VAT Groups.
3. Select which company to apply VAT Groups to & switch on. 

Select VAT Codes 

1. Select either income or expense
2. Across each available group, choose as many VAT codes you would like to register within that group 
3. Choose a default which will apply to a line item for an invoice when the decision tree chooses this group. 

NOTE: You must select a default VAT code within each group. The VAT codes selected here will be the only codes available at an invoice level. 

Property Owner & Creditor Contact Settings

To ensure the most accurate VAT code is populated, please check whether Owner and Creditor contacts are VAT enabled.

1. Access a specific owner or creditor contact.
2. Ensure the VAT enabled checkbox is ticked.

NOTE: VAT codes will be applied automatically at an income & expense invoice, which takes into consideration whether a property owner or supplier is VAT registered. To ensure accuracy, please review if owner and creditor contacts within your portfolio are VAT registered.

Property Group & Property VAT status

To ensure the most accurate VAT code is populated, please check whether property groups and properties are VAT elected or not. 

1. Navigate to the details tab of a property group or property.
2. Select whether the property is VAT elected and if it is partially or fully elected as well as the elected date. 

Invoices with VAT Groups

Expense Invoices

1. Navigate to Accounting then select Income and Expenses
2. Select the Expense Invoice you wish to edit, or create a new invoice.
3. Choose the creditor contact to which this applies to
4. You'll notice the most appropriate VAT code suggested based on the VAT hierarchy decision tree.
5. If needed, you can still manually select a different VAT code.

Income Invoices

1. Navigate to Accounting then select Income and Expenses
2. Select the Income Invoice you wish to edit, or create a new invoice.
3. Choose the owner contact to which this applies to.
4. You'll notice the most appropriate VAT code suggested based on the VAT hierarchy decision tree.
5. If needed, you can still manually select a different VAT code.

Benefits of Using VAT Groups

• Reduced Admin Burden: Streamline tax handling by automating VAT code selection, freeing up time for high-value tasks.
• Accurate Reporting: Ensure precision in financial reporting; essential for VAT-elected properties and compliance.
• Quicker Invoice Processing: Simplify the creation of invoices by automatically applying the pertinent VAT codes.

By integrating VAT Groups into your financial management routine, you can significantly enhance the integrity of your VAT reporting and reduce the administrative efforts associated with managing tax codes.