On 1st September 2020, GoCardless will start charging VAT on the fees we charge.
If you’re using the UK version of Xero, GoCardless for Xero will automatically account for the VAT and therefore no changes are needed to your setup.
If you’re using the global version of Xero, you will need to follow the steps below to make sure that the VAT is accounted for correctly. This action needs to be taken between 1pm on 31st August and 10am on 1st September 2020 to ensure that any VAT on fees for a payout on 1st September is recorded correctly.
Depending on where your business is located, different VAT rates apply. The VAT GoCardless will charge:
You have three choices of how to account for the VAT:
- Create a new expense account in Xero with the correct tax type
- Choose an existing expense account with the right tax type already applied
- Change the tax type on the expense account you currently use to account for GoCardless fees
For options 1 or 3, this Xero guide explains how to do this.
If you choose either option 1 or 2 you will need to update the reconciliation settings on your GoCardless for Xero account so that the fee records will be sent to the expense account with the correct VAT rate. You can access these settings here, and you will just need to update the GoCardless Fees setting.