7 ways we’ve improved FreeAgent’s VAT functionality

We know that VAT can be the source of more than a few headaches for practices. Here at FreeAgent, we’re always on the lookout for ways to make it as painless as possible for you and your clients. 

After listening to feedback from accountants and bookkeepers, we’ve given FreeAgent’s VAT functionality a subtle but powerful update. Here are seven additions to the software that save time, boost efficiency and streamline the VAT workflow for your practice and clients. 

1. A dedicated tax rate column in the VAT return

The full VAT report in FreeAgent now includes a Tax rate column, displaying the VAT rate applied to each item (for example, 20%, 5% or 0%. This update makes it possible to review VAT reports faster and with greater confidence - no mental arithmetic required!

We’re also bringing this visibility to the Show Transactions report. Soon, you’ll be able to see the exact VAT rate applied to each underlying transaction, making it faster to verify tax rates and fix inconsistencies across your portfolio. To learn more about how we’ve updated the Show Transactions report, see section 6.

2. A rules-based automation for VAT return reviews

With FreeAgent’s new VAT Checker, you can bid farewell to spending endless hours reviewing clients’ VAT returns manually.

Designed for ‘analysis, awareness and action’, the tool conducts an automated rules-based review of clients’ VAT returns - highlighting potential anomalies from the following types of transactions:  

1. Items with a VAT rate that differs from the default rate for that category
2. Items with a custom VAT value
3. Items with a VAT rate other than the standard rate 
4. Items where VAT has been added to transactions with a non-UK customer or supplier

After scanning the VAT return and identifying potential issues, the tool presents the underlying items for review. It then prompts you to make the relevant bulk changes within the reporting journey, as shown below. You can decide which changes to make and action them manually.

For practices managing VAT for a large number of clients, the VAT Checker reduces the manual workload while keeping account managers firmly in the driving seat.

3. Granular VAT access and filing controls for practices 

By popular request, we’ve introduced more granular controls for VAT access and filing. 

You can now control three elements of the VAT experience for clients separately in FreeAgent: 

• The client’s visibility of the VAT area
• The client’s ability to file VAT returns from the software
• The requirement for client approval

Practices with broadly consistent VAT requirements across their client base can now establish global default settings in their Practice Dashboard. If a client ever requires a different workflow, you can override these settings at the client level.

4. The ability to file clients’ VAT returns with unexplained bank transactions 

Transaction explanation is no longer mandatory for VAT return filing in FreeAgent. You can now file VAT returns with unexplained transactions through the software. 

This improvement gives you greater flexibility to exercise your professional judgement. With missing explanations no longer a blocker in FreeAgent, you can keep the VAT filing process moving and reduce the risk of delays in the run-up to quarterly deadlines. 

Together, these granular dashboard-level VAT controls accommodate a variety of operating models, giving practices the flexibility they need to support a broader range of client scenarios.

5. The ability for practices to unlock VAT returns 

From time to time, we know that you need to unlock your clients’ VAT returns, whether it’s to correct a date, amend the accounting basis or respond to a specific HMRC request. 

We wanted to make this process easier and give you greater control - you can now unlock a client’s VAT return without having to contact our support team. 

There are a couple of points to note with this update: unlocking a VAT return creates a permanent audit trail entry, and a copy of the original return is automatically added to the Files area of the client’s FreeAgent account.

6. A dedicated attachment column in the Show Transactions report 

The days of sifting through individual transactions to check for receipts, invoices or other supporting files are over thanks to the new ‘Attachment’ column in FreeAgent’s Show Transactions report. 

You and your clients can see at a glance if supporting documentation has been uploaded to each transaction. This makes it easy to identify gaps, compile a list of missing information, and share it with clients.

7. The ability to add multiple attachments to a single transaction

FreeAgent’s one-attachment-per-transaction limit is no more! Clients can now attach up to 50 image files to a single bank transaction and upload up to 10 files at a time. 

This hotly requested improvement allows FreeAgent to support a wider range of real-world bookkeeping scenarios, from a single Amazon payment covering several purchases to an invoice with multiple pages.

For VAT preparation, this update also creates a more complete evidence trail, making it easier to verify transactions, identify missing records and review a return confidently before filing.

A better VAT experience in FreeAgent 

We believe managing VAT should be as quick and efficient as possible, especially at scale. With these time-saving improvements, FreeAgent makes VAT more manageable than ever for accountants, bookkeepers and their clients.

To find out more and see our improved VAT functionality in action, you can request a free trial. If you’re a FreeAgent Partner, your dedicated Account Manager would be happy to walk you through these updates and answer any questions you might have - just drop them a line.