It depends on how you’d like to record the transaction, David. Using VAT Flat Rate Scheme (FRS), supplier invoices are typically entered differently compared to the standard VAT scheme.

QuickBooks Online is designed to handle the Flat Rate Scheme through its VAT settings. It calculates the VAT liability based on your flat rate percentage applied to your gross sales, not on purchase inputs, and it will take care of the calculations in line with the scheme rules. See this article for more information: Set up and manage the Flat Rate VAT Scheme in QuickBooks.

Under VAT FRS, you usually can't reclaim VAT on purchases (except for certain capital assets). As such, supplier invoices are typically entered as the full gross amount in the relevant expense category, with VAT set to "Zero-rated" or "No VAT." This ensures the full expense amount is recorded and VAT is not reclaimed inappropriately.

If you apply the supplier's VAT rate of 20%, QuickBooks will calculate reclaimable VAT input, which doesn't apply under the FRS framework (again, except for certain purchases). This could end up distorting your VAT report or your Profit & Loss statement.

Before doing this, it’s best to consult an accountant to ensure all actions are accurate and avoid potential issues.

If you have any other concerns, feel free to revisit this thread. We're here to help.