XBert Type: Standard
Accounting Software: Xero, MYOB, QuickBooks
Country Restriction: the United Kingdom only
Risk Type: Tax Risk
Business Function: Purchases
Overview
This XBert finds payments you have made to a supplier that included VAT, even though that supplier is not registered for VAT. If a supplier is not VAT registered, they should not be charging you VAT, and you cannot reclaim it on your VAT Return. Spotting this early protects your business from HMRC penalties and the hassle of chasing the supplier for a refund.
What it does
XBert looks at the money your business has paid to suppliers over the past year, both supplier bill payments and money-out bank transactions. It then checks each supplier against their UK business record. Where a payment included VAT but the supplier's record shows they are not VAT registered, XBert flags it for you to review.
How it works
XBert raises this alert when all of the following are true:
A supplier you have paid is matched to a UK business record that shows they are not registered for VAT.
A payment to that supplier (either an approved supplier bill payment or an approved money-out bank transaction) was dated in the last 12 months.
The payment included a VAT amount greater than zero.
To keep the alert meaningful, XBert applies a sensible threshold. When the supplier has been matched on their exact VAT number, even a small amount of VAT will be flagged. When the supplier could only be matched by name, XBert waits until the total VAT paid to them adds up to more than £10 before alerting you. XBert deliberately ignores draft, deleted or unapproved transactions, and any payment that carried no VAT.
Example/Use Case
Imagine James, a bookkeeper, has been paying a long-standing supplier, Northgate Supplies Ltd, for the past five years. Recently the supplier deregistered for VAT, but their invoices still showed VAT and James kept paying it, claiming back £240 of VAT across the year on the business's VAT Return. XBert flags the payments because Northgate Supplies Ltd is no longer VAT registered. James confirms the supplier's VAT status, requests corrected invoices with no VAT, removes the £240 from the next VAT Return and updates the supplier's tax settings, avoiding an unexpected bill from HMRC.
Accounting software
XBert integrates with:
Which countries it supports
The United Kingdom only.
Processes
This XBert falls under the Purchases (AP) category.
To action:
Confirm the supplier's contact details are correct and that you have matched the right business.
Check the supplier's VAT status using the UK VAT number checker.
If the supplier is genuinely not VAT registered, request corrected invoices that exclude VAT.
Update the supplier's tax rate and details in your accounting software so future transactions are recorded correctly.
Make sure the VAT incorrectly paid to a non-registered supplier is not claimed on your VAT Return, and adjust any return that has already included it.
Once corrected, mark the XBert as resolved.
By taking these steps, you can keep your VAT records accurate and avoid potential issues with HMRC.