XBert Type: Standard
Accounting Software: Xero
Country Restriction: GB only
Risk Type: Tax Risk
Business Function: Contacts
Overview
This XBert checks for UK suppliers whose VAT registration status is incorrectly recorded in your accounting system. It helps prevent the risk of reclaiming VAT from suppliers who are no longer VAT registered, which can lead to issues with HMRC and potential repayment obligations.
What it does
XBert reviews your active suppliers in Xero and matches them to HMRC records. If a supplier’s VAT status in Xero indicates that VAT is claimable (e.g. INPUT), but HMRC shows that the supplier is not registered for VAT, XBert flags the discrepancy.
This helps ensure your VAT Returns are accurate and prevents you from claiming input VAT on purchases where it is not valid.
How it works
XBert checks for suppliers where:
The supplier is active in your accounting system
Their tax type is set to INPUT (i.e., you’re claiming VAT on their bills)
They are matched to HMRC, and their VAT status is not active
There has been any journal activity involving the supplier
If these conditions are met, XBert raises an alert because VAT may be incorrectly claimed.
Note: This alert currently cannot filter by the de-registration date, so any VAT activity—even before they became unregistered—may trigger the alert. Future improvements will allow for more precise detection.
Example / Use Case
Your business has been dealing with a supplier for years. Over the last 12 months, that supplier deregistered for VAT due to reduced turnover. However, your system still treats them as VAT registered, and you continue to claim VAT on their invoices.
HMRC performs an audit, discovers the discrepancy, and issues an invoice demanding repayment of all input VAT claimed during the period after deregistration. You now need to chase the supplier for reimbursement, putting strain on your cashflow.
Accounting software
Xero
Which countries it supports
United Kingdom only
Processes
This XBert falls under the Compliance category.
To resolve:
Check the supplier’s VAT registration status
Open the supplier’s contact record in your accounting software
Update the default VAT setting for purchases based on the supplier’s status
If needed, request revised bills from the supplier that exclude VAT
Review any previous VAT claims and determine whether they were valid
Doing this helps you avoid penalties and ensures your VAT records remain HMRC compliant.