How does Briefcase automate VAT compliance?
Briefcase AI is trained on every single VAT legislations in the UK. Briefcase works out the correct VAT treatment for every transaction it processes, grounds each decision in HMRC guidance, and shows its reasoning so you can verify it.
Reverse charge support
- Overseas services: When a supplier is based overseas and the purchase is a service, for example a US software subscription, Briefcase applies the reverse charge and links to the supporting guidance.
- Domestic reverse charge (construction): Briefcase detects CIS invoices, including ones where the subcontractor has not shown a deduction line, splits labour and materials, and applies the domestic reverse charge where it belongs.
One source of truth: HMRC legislation
Briefcase does not guess VAT treatment from patterns alone. It maintains a knowledge base built from HMRC's published VAT notices (which refreshes with new updates weekly). When Briefcase assigns a rate, it records its reasoning and links to the HMRC guidance it relied on, so you can click through to the notice itself.
⚠️ As legislation is the source of truth, Briefcase deliberately does not learn VAT treatment from user edits. Category and tracking corrections teach Briefcase how your clients work; VAT corrections do not, because an edit could itself be wrong. If Briefcase gets a VAT treatment wrong, please reach out & we'll look into it.
How Briefcase chooses a VAT rate
- Verify the supplier: Briefcase extracts the supplier's VAT number and checks it against HMRC's register in real time. If the number fails verification, Briefcase will not reclaim input VAT, however the invoice is presented.
- Check the document is a valid VAT invoice: Briefcase tests each document against HMRC rules -proformas, quotes and requests for payment do not qualify, and Briefcase codes them so the net amount still reaches without claiming VAT that is not yet claimable.
- Determine the rate per line item: Each line is assessed individually, so an invoice mixing standard-rated and zero-rated items is coded line by line. Where a line has a special treatment, such as zero-rated books or exempt insurance, Briefcase applies it and cites the relevant HMRC notice.
- Match to your ledger's own tax codes: For Xero and QuickBooks clients, Briefcase reads the tax rates configured in your ledger and selects from that list. It never invents codes, and it respects account classes, so an income line always receives an income-side rate.
- Domestic reverse charge (construction): Briefcase detects CIS invoices, including ones where the subcontractor has not shown a deduction line, splits labour and materials, and applies the domestic reverse charge where it belongs.
- Imported goods. Goods are treated differently from services: Briefcase does not apply the reverse charge to imports, and codes them so the net spend is still reported correctly.
Learn more: How does Briefcase handle CIS invoices?
Good to know
- Briefcase supports UK VAT. Other jurisdictions are not currently supported.
- Clients on the flat rate scheme (Xero and QuickBooks) have transactions coded No VAT; Briefcase does not calculate flat rate returns.
- Postponed VAT accounting, margin schemes and partial exemption calculations are not currently supported.