iplicit unveils more time-saving features to help charities tackle partial VAT

Accounting software platform iplicit has rolled out new features to simplify some of the most complex work facing charity finance teams. 

Partial VAT is an onerous task for many charities that undertake commercial activities. 

It can take two to three days for a senior member of a finance department to calculate at year-end.  

iplicit already had a unique set of features to take much of the labour out of VAT-related tasks but has developed more in response to customer demand. 

Calculating Partial VAT

Paul Sparkes, Commercial Director at iplicit, says: “Calculating and applying partial VAT can be a substantial drain on the resources of a finance team, taking up the time of senior leaders and often leaving budget holders unclear about their financial position. 

“We already knew how highly our non-profit customers valued our partial VAT functionality. In response to their feedback, we’ve extended this further and made iplicit deliver more productivity benefits. 

“We’ve extended the scope of the way the system calculates and applies reduced rates and made it easier for finance teams to manage the whole process.” 

Charities which raise funds through commercial ventures, such as retail sales or events, have to apply partial VAT in one of two key ways: 

  • as a percentage figure(s) agreed with HMRC and applied to applicable transactions; or 
  • more commonly, by comparing VATable turnover with total turnover at the end of a period and applying an adjustment retrospectively to the accounts.  

Applying partial VAT after the fact can leave budget holders uncertain how much of their money they have left to spend. 

“Partial VAT can involve significant adjustments to the financial statements,” says Paul Sparkes. 

“The charity can end up owing HMRC more than it expected, which can seriously affect cash flow and cost controls. 

“In the case of a charity with turnover running into millions of pounds, the figures involved can be big, so it can have a material effect on operations. 

“For the vast majority of charities, this kind of work is done laboriously in spreadsheets. Normally it’s the CFO or finance director who has to check the adjustments for partial VAT – and that could involve two or three days of calculations at the end of a year.” 

iplicit – whose non-profit customers include Health Poverty Action, Edinburgh International Festival and Yorkshire Wildlife Trust – already offered users the ability to apply their choice of methods for automatically calculating partial VAT.   

Its latest software release allows users to easily apply a flexible range of partial VAT rules to a transaction. This enables the calculation to be carried out automatically when the data is entered – based on an account code, fund, project or a range of other criteria. This makes data entry simple while giving real time updates on partial VAT adjustments to budget holders, who enjoy far greater visibility and an easier way of maintaining cost controls.  

Users can also employ iplicit’s unlimited accounting dimensions to specify that the partial VAT rule should apply to particular projects, grants, awards or types of funds automatically. 

Find out more 

You can find out more about how iplicit helps non-profit organisations, take a quick tour of the software or get in touch for a demonstration.  

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