VAT margin schemes

Hi Pete,

Unfortunately, at this point in time, Clear Books does not support the margin scheme.

OK, I just found a post from four years ago in regard to the:

"This is currently within our to do list for our development team"

Is it still in the todo list and has it moved nearer the to?

I understand that there is no direct option, but while waiting for this to be implemented, does this mean there is no actual way (or at least a workaround) to account for items I sell under this scheme, and that I made a mistake in deciding to use Clearbooks for my businesses?

For example I bought a used item with no VAT for £600 and sell it for £660.

I am supposed to pay £10 (16.67% ie one-sixth) VAT.

can I do this using an invoice with "manual" for VAT rate.

If so would the invoice add a manual rate of £10 to the £660 so the invoice is for £670, or do I make the gross invoice. £660 including £10 VAT?

Hi Pete,

I am confident a creative workaround could be devised to overcome this obstacle with the use of journals, I would suggest consulting your accountant as to the best way of making this happen.

Unfortunately, the method you have outlined above would not work as the Vat would be calculated on the full value of the invoice line.

A way around this may be to separate these into 2 invoices lines of £600 (purchase value) which would be 0% rated and £60 (profit) at %16.67. But from a practical standpoint, I'm unsure this invoice would be acceptable to be sent to a customer. And I believe that best practice is not to modify invoices after they have been issued.

Hi Pete

Per this: https://www.gov.uk/vat-margin-schemes/vat-return

Enter the £600 cost as normal using 0% VAT, to get it into box 7.

Enter the sales invoice entering the gross £660 and a manual £10 VAT.

I think this is what you suggested and so don't know why Theo would think it wouldn't work?

@Theo - with the countless number of items CB has promised in its to-do lists over the year, if you then fail to complete them, or more likely, dump them in a bin somewhere, it's incumbent on you to come clean and say it's been dropped and to provide a workaround, or admit there is no workaround.

But from a practical standpoint, I'm unsure this invoice would be acceptable to be sent to a customer.

In the case of these customers (private individuals not business) they would be happy for any form of invoice. I'm not too happy because I wouldn't always want my markup to be made known, but that's obviously what you accept when using this scheme.

Enter the £600 cost as normal using 0% VAT, to get it into box 7.

Sounds good but I don't quite understand. Where do you mean to enter.

Enter the sales invoice entering the gross £660 and a manual £10 VAT.

This is what I was intending (see attached

Got it!

Ok these are items I have already bought (without VAT) so the purchase part is already done.

So yes your illustration is what I was thinking of initially.

Unfortunately, at this point in time, Clear Books does not support the margin scheme.

Perhaps Clearbooks then doesn't need some special margin scheme feature as this is quite simple, just needs adding to the manual/documentation

I wonder why HMRC say 16.67% of the gross instead of the (easier) 20% of the net margin?

I agree that CB doesn't need a special scheme and it was daft to tell us they were thinking of doing one.

The 16.67% is 1/6th and is far easier to calculate for most margin traders where their books (purchases and sales) are kept on a gross basis.