Taxes and tax returns

Taxes on premium (VAT, premium tax, stamp duty), on supplier bills and withholding on commission are set up once and then worked out on every quote, invoice and bill.

Tax codes

Accounting > Taxes lists the company's taxes. Each has:

• a kind: VAT, premium tax, stamp duty, withholding or other;
• a rate and/or a fixed amount (stamp duty is often a fixed sum per policy);
• what it applies to: premium, supplier bills or commission;
• the lines of business it applies to (leave empty for all), so health can be exempt from VAT while motor is not;
• the ledger account it is owed to, and for bills the account where recoverable VAT goes.

Once a company has premium tax codes, they replace the single tax rate in the company and product settings. A quote shows each tax separately, the policy and its invoices keep the same split, and the ledger posts each tax to its own account.

Supplier bills take a tax code when the VAT can be recovered; the tax is added to the bill and booked as recoverable.

Returns

Accounting > Tax returns > Prepare a return takes a tax and a period and adds up:

• for taxes on premium: the tax on invoices issued in the period, less the tax on credit notes;
• for VAT, the recoverable VAT on approved bills is taken off;
• for withholding: the tax kept from commission statements paid to agents and brokers.

Detail lists each document behind the figures and Excel downloads it for the tax authority. Mark as filed records the date and the authority's reference. Mark as paid posts the payment from the bank against the tax owed.

Good to know

• Changing a rate affects new quotes only; issued policies keep the tax they were sold with.
• The tax owed on the balance sheet should equal the returns not yet paid plus the current period. If it does not, the Detail of the return shows which documents are in it.