XBert Type: Standard
Accounting Software: Xero
Country Restriction: the United Kingdom only
Risk Type: Tax Risk
Business Function: Compliance
Overview
This XBert checks whether a UK supplier you are reclaiming VAT from is still a live, registered company. If you are set up to claim VAT on a supplier's purchases but their official company record shows they are no longer in business, it raises an alert so you can review the VAT treatment before it causes a problem with HMRC.
What it does
XBert looks at your active suppliers that are configured to reclaim UK input VAT on their purchases. It matches each of these suppliers to their official UK company record held on the Companies House register, then checks the company's current status.
When a supplier is set up to claim VAT but their company record shows a status such as dissolved, in liquidation, in administration or closed, XBert flags it. This helps keep your VAT Returns accurate and stops you reclaiming input VAT against a company that is no longer trading.
How it works
XBert raises this alert for a supplier where all of the following are true:
The supplier is active in your accounting software.
The supplier's default purchase tax setting is configured to reclaim UK input VAT (in other words, you are claiming VAT back on their bills).
The supplier has been matched to an official UK company record on the Companies House register.
There has been transaction activity recorded against that supplier.
The matched company's current Companies House status is not one of the active, trading statuses (for example it shows as dissolved, in liquidation, in administration, in receivership or closed).
This is a check on the company's current, live status. XBert deliberately ignores suppliers whose company record still shows them as active, open or registered, because those are exactly the cases where reclaiming VAT is correct. It also does not raise the alert when no company status is recorded, because a blank status is not proof that anything is wrong.
Example / Use Case
Priya runs a small design studio in Manchester and regularly buys print materials from Northgate Print Ltd. Her bookkeeping is set up to reclaim VAT on every bill from this supplier. Over the past few months Northgate Print Ltd quietly went into liquidation and was struck off, but nobody told Priya, so her supplier record still claims VAT on each new invoice.
XBert matches Northgate Print Ltd to its Companies House record, sees the status is now "in liquidation", and raises this alert. Priya reviews the supplier, switches their purchases to a no-VAT treatment, and checks the recent bills. She finds she had reclaimed roughly £640 of input VAT she was not entitled to. Catching it early means she can correct it on her next VAT Return rather than facing a repayment demand after an HMRC review.
Accounting software
Xero
Which countries it supports
United Kingdom only
Processes
This XBert falls under the Compliance category.
To resolve it:
Confirm the supplier's current status by checking their record on the Companies House register and their VAT registration position.
Open the supplier's contact record in your accounting software.
Update the default VAT treatment for their purchases so it matches their current status (for example, switch to a no-VAT setting if they are no longer validly registered).
If needed, ask the supplier for revised bills that exclude VAT.
Review the VAT already reclaimed on this supplier's recent bills and decide whether any of it needs to be corrected on your VAT Return.
Once the supplier's VAT treatment is corrected, mark the XBert as resolved.
Taking these steps helps you avoid penalties and keeps your VAT records accurate and HMRC compliant.