If you sell a mixture of Standard, Zero-rated, or Reduced-rated goods, and the VAT rates on your settlements in Link My Books are not what you expect, this guide will help you troubleshoot the issue.
1. Are You Using the Product Groups Feature?
A common first step to diagnosing VAT discrepancies, especially with mixed-rate goods, is to check if you are actively using the Product Groups feature in Link My Books.
How to Check if Product Groups are Enabled:
Navigate to Settings: In Link My Books, go to Settings > Settlement Settings.
Check 'Turn on Product Groups': On the 'Settlement Settings' page, check if the 'Turn on Product Groups' option is ticked. If it is, you are actively using the Product Groups feature.
For a deeper understanding of how automatic product grouping by VAT rate works, please refer to our dedicated article: 'Understanding Automatic Product Grouping by VAT Rate'.
2. If You ARE Using Product Groups (and VAT is Incorrect)
If Product Groups are enabled, VAT discrepancies often occur if your individual SKUs (products) are not linked to the correct product group.
What to Check: SKU to Product Group Assignment
First, verify that your SKUs are correctly assigned to the appropriate Product Groups. Go to Inventory > Product Groups in your Link My Books dashboard, then select the 'Show SKUs in this group' against the Product Group.
How to Correct SKU Assignment:
If an SKU is linked to the wrong group, you can change its assignment either:
Manually: From the 'Product SKUs' tab, locate the SKU, and manually select the correct product group from its dropdown menu.
Via Bulk Upload: For a quicker method to update multiple SKUs at once, use the bulk upload option. For more information on using bulk upload, click here.
Important Note on Updates: If you change the product group an SKU is attached to:
Only future settlements and any settlements currently marked as 'ready to send' will be updated with the new VAT rates.
Settlements that have already been sent to your accounting software will not be automatically updated. To reflect these changes for past sent settlements, you would need to Rollback those settlements in Link My Books, ensure you remove the corresponding invoice/journal in Xero/QuickBooks to avoid duplicates, and then re-send them.
3. If You ARE NOT Using Product Groups (and VAT is Incorrect)
If you're not using Product Groups (or if they are not enabled for VAT allocation), VAT discrepancies usually stem from your overall tax mapping settings.
What to Check: Accounts and Taxes Mapping
Review Your Tax Mapping: Verify whether you are using the default tax rates supplied by Link My Books during your initial setup, or if you have identified and set your own custom tax rates.
You can review the tax rates being applied to your settlements from the Accounts and Taxes Mapping option.
If you have any questions about this article or feedback on how we could make it better please reach out to the support team via the blue chat icon on the bottom right of the page or via email to [email protected].