By using the accounting data from your forecast, we’ll estimate your upcoming VAT payments. If you make a change to the forecast, it will automatically update that transaction.
To be able to predict VAT in Fluidly, you’ll need to be:
- On the Accrual Scheme on Xero. This means VAT is calculated when invoices or bills are raised
- Paying VAT quarterly
- Recording VAT payments on the default accounts 820 or 2202 if you’re using Xero
This feature will be available for QuickBooks in the next few weeks.
We’re looking at making this feature available to businesses using the Cash Scheme or paying monthly soon.
How does Fluidly automatically calculate VAT estimates?
We use a combination of:
- The Balance Sheet liability: any invoices or bills in that period
- Predicted transactions: any regular and one-off transactions or monthly total adjustments
Our analysis also depends on where you are in your VAT period. Here’s three scenarios:
1. VAT period has ended and a payment is due: We use the Balance Sheet liability only
2. You’re in the middle of a VAT period: We use the Balance Sheet liability for the quarter so far and any remaining predicted transactions
3. The VAT period is in the future: We use predicted transactions only
To make sure we don’t calculate VAT unnecessarily for any predicted transactions (e.g. payroll), we look at how VAT is applied to an account line:
- Xero users: Predicted transactions will use the default tax rate on that account line