Note: this procedure involves creating a new Standard Rate VAT code. If you would prefer to edit your existing Standard Rate VAT codes, click here.
General information
On 24 November, 2008, in his pre-budget report, the Chancellor announced a temporary decrease on the Standard Rate VAT to 15% for a period of 13 months. From 1 December, 2008, the Standard Rate VAT will change from 17.5% to 15%. If you track VAT, below is information you will need to make the necessary changes in QuickBooks. For more details regarding the Standard Rate VAT changes, visit the HMRC Web site.
Intuit is unable to advise which VAT rate should be used for transactions that span the two rates. Please refer to the HMRC detailed VAT Guide on which Standard Rate VAT to use for sales that span 1 December, 2008. If you are still unsure, please contact the HMRC National Advice Service (0845 010 9000).
Detailed instructions
Complete the following checklist of required changes:
*QuickBooks 2008 only
Note: EC codes, items, and groups are not required for cash accoutning.
Create new VAT items*
In QuickBooks 2008:
Note: refer the table below for recommended VAT items.
- Go to the Lists menu and click Item List.
- Click Item at the bottom of the list and click New.
- Click the Type drop-down list and choose VAT Item.
- Enter a name for the item. The name is for your own use.
- Optional - Enter a description. This will auto fill with the item name. You can modify this if required.
- Enter the applicable VAT Rate %.
- Select the applicable VAT Agency.
- Using the drop down list, specify which VAT Return Box the item must be reported in.
- Click OK.
Table of required new VAT items and VAT groups
| VAT Name | Description | VAT Rate % or Amt | VAT Agency | VAT Return Box | VAT Item/ VAT Group | Required for cash accounting? |
| Temp Standard Purchases | Temporary Standard Purchases | 15.0% | HMRC VAT | Domestic Purchases (Box 4, Box 7) | VAT Item | Yes |
| Temp Standard Sales | Temporary Standard Sales | 15.0% | HMRC VAT | Domestic Sales (Box 1, Box 6) | VAT Item | Yes |
| EC Purch Good Temp Std | EC Purch Goods Temporary Standard Rate | -15.0% | HMRC VAT | EC Purchases of Goods (Box 2, Box 9) | VAT Item | No |
| Reverse Charge Purch Temp Std | Reverse Charge Purch Temporary Standard | -15.0% | HMRC VAT | Reverse Charge (Carousel/MTIC) (Box 1, None) | VAT Item | No |
| Group Name/Number | Description | VAT items included in group (must be entered in the order shown) | Item/Group | Required for cash accounting? |
| EC Purch Goods 15% Group | EC Purch Goods Group - Temporary 15% VAT Rate | - Temp Standard Purchases
- EC Purch Goods Temp Std
| VAT Group | No |
| Reverse Charge Purch 15% Group | Reverse Charge Purchases Group - Temp 15% | - Temp Standard Purchases
- Reverse Charge Purch Temp Std
| VAT Group | No |
Create new VAT groups*
Note: refer the table below for recommended VAT groups.
- Make sure you have already set up all of the single (flat rate) VAT items you need to set up the VAT group item.
- Go to the Lists menu and click Item List.
- Click Item at the bottom of the list and click New.
- Click the Type drop-down list and choose VAT Group.
- Enter a name for the group.
- Optional - Enter a description. This will auto fill with the item name. You can modify this if required. This prints on your sales forms. You cannot edit the description on the forms themselves.
- Click the first line in the table at the bottom of the New Item window. Then, click the VAT Item drop-down arrow. Choose the first VAT item you want to include in the group, then press the Tab key on your keyboard.
- Repeat until you've added all of the VAT items to the group.
- Click OK.
- If you haven't already done so, create a VAT code to represent the VAT group.
Table of required new VAT items and VAT groups
| VAT Name | Description | VAT Rate % or Amt | VAT Agency | VAT Return Box | VAT Item/ VAT Group | Required for cash accounting? |
| Temp Standard Purchases | Temporary Standard Purchases | 15.0% | HMRC VAT | Domestic Purchases (Box 4, Box 7) | VAT Item | Yes |
| Temp Standard Sales | Temporary Standard Sales | 15.0% | HMRC VAT | Domestic Sales (Box 1, Box 6) | VAT Item | Yes |
| EC Purch Good Temp Std | EC Purch Goods Temporary Standard Rate | -15.0% | HMRC VAT | EC Purchases of Goods (Box 2, Box 9) | VAT Item | No |
| Reverse Charge Purch Temp Std | Reverse Charge Purch Temporary Standard | -15.0% | HMRC VAT | Reverse Charge (Carousel/MTIC) (Box 1, None) | VAT Item | No |
| Group Name/Number | Description | VAT items included in group (must be entered in the order shown) | Item/Group | Required for cash accounting? |
| EC Purch Goods 15% Group | EC Purch Goods Group - Temporary 15% VAT Rate | - Temp Standard Purchases
- EC Purch Goods Temp Std
| VAT Group | No |
| Reverse Charge Purch 15% Group | Reverse Charge Purchases Group - Temp 15% | - Temp Standard Purchases
- Reverse Charge Purch Temp Std
| VAT Group | No |
Create new VAT codes
Be sure that any new VAT codes you create are set up properly and that you use the correct one on each transaction. You will need to create new VAT items and VAT groups before setting up the new VAT codes. Please refer to "Create a new VAT item" and "Create a new VAT group" sections for instructions on how to do this.
In QuickBooks 2008:
- Go to the Lists menu and click VAT Code List.
- Click the VAT Code button at the bottom of the list and then click New.
- Enter a code and a description for the tax, for example, Standard (15%). In the VAT Code field, enter up to 3 characters that you will recognise on a form, such as an invoice. In the Description field, enter a note to remind yourself of what the code stands for. Refer to the table below for the list of recommended new VAT codes.
- Select the Taxable radio button.
- Taxable codes represent VAT items or VAT group items. The VAT item contains details about the tax, such as the rate or amount, and links to a single line of the VAT return.
- If you want to track the VAT you pay on business-related purchases, click the VAT Item for Purchases drop-down arrow. Choose the appropriate VAT item (one that links to a return box for tax you paid on your purchases).
- If it doesn't already exist, create the VAT item or VAT group item that this VAT represents.
- Click the VAT Item for Sales drop-down arrow and choose or create the VAT item (one that links to a return box for tax you collected on your sales).
- Click OK.
Table of required new VAT codes
| VAT code | Description | Taxable or non-taxable | VAT item/group for purchases | VAT item/group for sales | Notes | Required for cash accounting? |
| TS | Temporary Standard (15%) | Taxable | Temp Standard Purchases | Temp Standard Sales | Remember to create these VAT items first | Yes |
| EGT | EC Goods Temp Standard 15% Txbl | Taxable | EC Purch Goods 15% Group | EC Sales Goods 0% Group (already exists) | Remember to create these EC Purchase items first | No |
In QuickBooks 2006:
- From the Lists menu, choose VAT Codes List.
- From the VAT code menu button, select New.
- Fill in the New VAT Code window:
- In the VAT Code field, type a unique letter, number, or two-character combination for this code.
- If you want, enter a description to help you remember what this VAT code is for. For example, Standard 15%.
- Type the VAT percentage for this code. For example, 15.0.
- Click OK.
Table of required new VAT codes
| VAT code | Description | Rate | EC VAT Code | Required for cash accounting? |
| TS | Temporary Standard (15%) | 15.0% | No | Yes |
| EGT | EC Goods Temp Standard 15% Txbl | 15.0% | Yes | No |
Rename your old Standard Rate VAT code
- Go to the Lists menu and click VAT Code List.
- Click the VAT Code button at the bottom of the list and then click Edit VAT Code.
- In the Description field, enter a name that represents that historical Standard Rate VAT, for example, Standard (17.5%).
Starting 1 December, 2008, use your new Standard Rate VAT code on any new business forms. Historical invoices will not be affected; they will still use the 17.5% VAT rate.
Update default VAT code in the VAT Preferences section (if required)
- Go to the Edit menu and click Preferences.
- In the Preferences window, click VAT in the list on the left.
- Click the Company Preferences tab.
- Select the default VAT code (your new 15% VAT code).
- Click OK.
Update customer VAT codes (if required)
In QuickBooks 2008, there are two ways to update your customer VAT codes with the new VAT information. For QuickBooks 2006, use the manual method of updating your customer VAT codes.
Manually update your customer VAT codes
- If you haven't already done so, open the VAT preferences and allow customer VAT codes.
- Click Customer Centre to open it, and then click the Customers & Jobs tab on the left side of the window (for QuickBooks 2006, go to the List menu, and then click Customer:Job List).
- Double-click the customer name. The Edit Customer window opens.
- Click the Additional Info tab.
- Click the VAT Code drop-down arrow and choose the new 15% Standard Rate VAT code for that customer.
- If applicable, enter the customer's VAT Registration Number in the VAT Registration Number field.
- Click OK.
- Repeat steps 3-7 for each customer.
OR
Export customer VAT codes to Excel
- Make a backup of your company file.
- Go to the Customers menu and select Customer Centre.
- Select the Excel dropdown button and select Export Customer List.
- Select the "a new Excel workbook" radio button, and then click Export. The Excel spreadsheet appears.
- In Excel, update the information in the “VAT Code” column with the new VAT codes that you have created in the company file.
- Go to the File menu and select Save.
- Close the spreadsheet.
- In QuickBooks, go to the Customers menu and select Customer Centre.
- Select the Excel dropdown button and select Import from Excel.
- Browse for the Excel (.xls) that you just saved.
- Select a sheet in this Excel workbook.
- In the "Choose a mapping" field, add a new mapping.
- Type the name for the mapping.
- Add the following fields
- Job or Customer Name = Customer
- VAT Code = VAT Code
- In the Mappings window, click Save.
- Click Import
Update supplier VAT codes (if required)*
In QuickBooks 2008, there are two ways to update your supplier VAT codes with the new VAT information. For QuickBooks 2006, use the manual method of updating your supplier VAT codes.
Manually update your supplier VAT codes
- If you haven't already done so, open the VAT preferences and select Use Supplier VAT Codes.
- Go to the Edit menu and click Preferences.
- In the Preferences window, click VAT in the list on the left.
- Click the Company Preferences tab.
- Click Supplier Centre to open it, and then click the Suppliers tab on the left side of the window.
- Double-click the supplier name. The Edit Supplier window opens.
- Click the Additional Info tab.
- In the VAT Information section of the window, click the VAT Code drop-down arrow and choose the 15 % Standard Rate VAT code for that supplier.
- If applicable, enter the supplier's VAT Registration Number in the VAT Registration No. field.
- Click OK.
- Repeat steps 3-7 for each supplier.
OR
Export supplier VAT codes to Excel
- Make a backup of your company file.
- Go to the Suppliers menu and select Supplier Centre.
- Select the Excel dropdown button and select Export Supplier List.
- Select the "a new Excel workbook" radio button, and then click Export. The Excel spreadsheet appears.
- In Excel, update the information in the “VAT Code” column with the new VAT codes that you have created in the company file.
- Go to the File menu and select Save.
- Close the spreadsheet.
- In QuickBooks, go to the Suppliers menu and select Supplier Centre.
- Select the Excel dropdown button and select Import from Excel.
- Browse for the Excel (.xls) that you just saved.
- Select a sheet in this Excel workbook.
- In the "Choose a mapping" field, add a new mapping.
- Type the name for the mapping.
- Add the following fields
- Name = Supplier
- VAT Code = VAT Code
- In the Mappings window, click Save.
- Click Import.
- In the Duplicate Record Found window, select Replace existing data with import data, ignoring blank fields, and then click Apply to All.
- Save the log file that is generated.
- Confirm the supplier VAT codes have been changed and nothing else.
Update items
In QuickBooks 2008, there are two ways to update your item information. For QuickBooks 2006, use the manual method of updating your item information.
Manually update your items
- Go to the Lists menu and click Item List.
- Select the item that you want to change.
- Click Item at the bottom of the list and then click Edit Item. The Edit Item window appears.
- Select your new 15% VAT code.
- Click OK.
- Repeat steps 2-5 for all your items.
OR
Export your items to Excel
- Make a backup of your company file.
- Go to the Lists menu and select Item List.
- Select the Excel dropdown button and select Export All Items.
- Select the "a new Excel workbook" radio button, and then click Export. The Excel spreadsheet appears.
- In Excel, update the information in the “VAT Code” column and "VAT Code for Purchases" with the new VAT codes that you have created in the company file.
- Go to the File menu and select Save.
- Close the spreadsheet.
- In QuickBooks, go to the Items menu and select Item List.
- Select the Excel dropdown button and select Import Items.
- Browse for the Excel (.xls) that you just saved.
- Select a sheet in this Excel workbook.
- In the "Choose a mapping" field, add a new mapping.
- Type the name for the mapping.
- Add the following fields:
- Type = Type
- Name = Item
- VAT Code = VAT Code
- VAT Code for Purchases = VAT Code for Purchases
- In the Mappings window, click Save.
- Click Import.
- In the Duplicate Record Found window, select Replace existing data with import data, ignoring blank fields, and then click Apply to All.
- Save the log file that is generated.
- Confirm the items have been updated with the new VAT codes and nothing else has changed.
Update accounts
In QuickBooks 2008, there are two ways to update your account information. For QuickBooks 2006, use the manual method of updating your account information.
Manually update your account information
- Go to the Lists menu and click Chart of Accounts.
- Select the account that you want to change.
- Click Account at the bottom of the list and then click Edit Account. The Edit Account window appears.
- Select your new 15% VAT code.
- Click OK.
- Repeat steps 2-5 for all your accounts.
OR
Export your account information to Excel
- Make a backup of your company file.
- Go to the Reports menu, select List, and then select Account Listing.
- Click Modify Report.
- On the Display tab, click VAT Code in the Columns list, and then click OK.
- Click Export.
- Select the "a new Excel workbook" radio button, and then click Export. The Excel spreadsheet appears.
- In Excel, update the information in the “VAT Code” column with the new VAT codes that you have created in the company file.
- Go to the File menu and select Save.
- Close the spreadsheet.
- In QuickBooks, go to the File menu and select Utilities.
- Browse for the Excel (.xls) that you just saved.
- Select a sheet in this Excel workbook.
- In the "Choose a mapping" field, add a new mapping.
- Type the name for the mapping.
- Add the following fields:
- Type = Type
- Name = Account
- VAT Code = VAT Code
- In the Mappings window, click Save.
- Click Import.
- In the Duplicate Record Found window, select Replace existing data with import data, ignoring blank fields, and then click Apply to All.
- Save the log file that is generated.
- Confirm the account VAT codes have been updated with the new VAT codes and nothing else has changed.
Update memorised transactions
- Go to the Lists menu and click Memorised Transaction List.
- Double-click the memorised transaction you want to edit.
- Edit the transaction as needed.
- Rememorise the transaction by choosing Memorise from the Edit menu.
- When asked whether you want to replace the memorised transaction, click Replace.
- If you are only entering the transaction information for future use, close the transaction window by clicking the Clear button and then clicking the close box at the top of the window.
Progress invoices and other business forms
If you have started progress invoicing on an estimate with the old Standard Rate VAT of 17.5% and will finish with the new Standard Rate VAT of 15%, the estimate may have an amount outstanding if 100% of the invoice items have been invoiced.
- Edit the original estimate and reduce it to show the amount that has been invoiced prior to December 1, 2008.
- Add a change order for this estimate.
- Create a new estimate for the remaining amount to be invoiced with the new percentage.
If you have already completed invoicing for the full amount at two different percentages, you can edit the original estimate and remove the checkmark in the Estimate Active box.
Purchase orders and sales orders that have been created with 17.5% will have to be verified when put into item receipts, bills, or invoices to ensure the correct VAT rate is charged dependent on the tax point. For more details regarding the Standard Rate VAT changes, visit the HMRC Web site.
