XBert Type: Standard
Accounting Software: Xero, MYOB, QuickBooks Online
Country Restriction: United Kingdom only
Risk Type: Tax Risk
Business Function: Contacts
Overview
This XBert finds contacts that have large VAT activity in your accounts but no VAT number recorded against them. When VAT is being collected or claimed against a contact you hold no VAT registration details for, your VAT return may be inaccurate and you could struggle to support those figures if HMRC ever asks.
What it does
It looks at the cash VAT activity recorded against each of your contacts over the past year and checks whether that contact has a VAT number saved in your accounting software. It flags any active contact that has substantial VAT activity but a blank VAT number field.
In particular it reviews:
VAT on money you have paid out (cash expenses).
VAT on money you have received (cash income).
How it works
XBert adds up the VAT recorded against each contact across the trailing 12 months (from the first day of the same month last year up to the end of last month). It then raises this XBert for a contact when both of the following are true:
The contact is active in your accounting software and has no VAT number recorded against it.
The total VAT activity for that contact, added together across expenses and income, is more than £100.
To keep the result accurate, XBert deliberately ignores some activity. It does not count VAT from contacts you have archived or deleted, and it leaves out any transaction whose underlying document has been voided, deleted, or is still in draft. It also skips contacts you have matched manually. Contacts that already have a VAT number recorded, or that fall below the £100 level, are not flagged. Every contact that genuinely clears the £100 threshold is surfaced, so nothing material is hidden from you.
Example/Use Case
Maxine runs a busy mechanic's shop and buys most of her tyres from a supplier called Auto Express. Over the year she pays Auto Express many invoices and reclaims around £4,200 of VAT on those purchases. When she first set the supplier up, she forgot to enter Auto Express's VAT number, so the contact's VAT field is blank. XBert spots the £4,200 of VAT activity against a contact with no VAT number and raises this alert. Maxine requests the VAT number from Auto Express, confirms it with HMRC's online checker, and adds it to the supplier record. Her VAT return is now properly supported and she can prove her input VAT claim if it is ever queried.
Accounting software
This XBert runs on UK-based accounting software, including:
Xero
MYOB
QuickBooks Online
Which countries it supports
United Kingdom
Processes
This XBert is part of the Contacts business area. To resolve it:
Open the flagged contact in your accounting software and confirm that the VAT number really is missing.
Request the correct VAT number from the contact if you do not already hold it.
Verify the number using HMRC's free "Check a UK VAT number" service to make sure it is valid.
Add the verified VAT number to the contact's record so future transactions are recorded correctly.
If the VAT activity against the contact looks wrong rather than the VAT number simply being missing, review the underlying transactions and correct the VAT treatment.
Once the contact details are corrected, mark this XBert as resolved.