UK Agency Chart of Accounts for Xero with VAT Codes (Free)

An agency’s cost base is people and software, and a large share of the software is bought from companies based abroad. That puts two questions at the centre of the books that a generic chart ignores: how VAT works on overseas services, and how the people you pay are classified. This is a UK agency chart of accounts built for Xero, with overseas software, contractors, and pass-through media coded for the reverse charge and flagged for the status question. It ships as a readable reference CSV and a ready-to-import CSV.

Overseas software and the reverse charge

Design tools, cloud hosting, analytics, and ad platforms are usually billed from outside the UK, and for a VAT-registered agency those general-rule B2B services fall under the reverse charge. The overseas invoice shows no UK VAT; you credit output VAT and debit the same amount as input tax on your own return, so a fully taxable agency nets to nil but still has to record it. The software subscriptions account therefore carries Reverse Charge Expenses (20%) as its allowed code beside the standard default, because some tools are UK-billed and some are not. The error this prevents is treating a no-VAT overseas invoice as carrying reclaimable input VAT, or omitting the reverse-charge entry altogether.

Contractors and the IR35 question

Agencies run on freelancers, and a contractor invoice is not always just a cost. Under the off-payroll working rules, a contractor working through their own company may be taxed like an employee, and for large or medium clients an agency in the supply chain can become responsible for the deduction. The chart gives freelancer and contractor costs its own account so those payments are easy to pull out and review for status, with the reverse charge listed for overseas freelancers. The account is where you record the cost; the IR35 determination itself stays a process step with the CEST tool and your accountant.

Pass-through media versus your own fee

The other big overseas line is paid media bought for clients. The chart separates pass-through media and ad spend from the agency commission you charge on top, because the media is mostly billed from outside the UK under the reverse charge while your fee is your own standard-rated supply. Letting the two pool together blurs the margin on every campaign, so they sit in different accounts with the media account defaulting to standard and listing the reverse charge.

Defaults prefill, you override per line

Each VAT code here is a default Xero prefills onto the line, after the contact and item defaults, and you can override any line. The reverse charge is listed as an allowed alternative rather than a default precisely because not every subscription or media buy is overseas, so the readable CSV pairs the standard default with the reverse-charge option per account.

How to use it

1. Open the reference CSV and adapt the account names to your agency, keeping the software, contractor, and media accounts.
2. In Xero go to Accounting, then Chart of accounts, then Import, and upload the CSV into a demo organisation first.
3. Confirm the standard and reverse-charge rates exist in your org.
4. Brief whoever codes invoices on which overseas suppliers trigger the reverse charge.

The recurring work is a ledger dominated by recurring subscriptions and contractor invoices:

• Hubdoc collects recurring SaaS receipts into the file.
• ExpenseFlow reads each receipt and supplier invoice, flags an overseas supplier that has charged no UK VAT so it can be reverse-charged rather than wrongly reclaimed, flags contractor payments so the IR35 question is raised at capture, and posts each into Xero against the right account.
• Dext applies supplier rules for repeat tools.

For the reverse charge, IR35, and home-office rules in full, see the UK agency expenses guide. On QuickBooks instead? See the UK agency chart of accounts for QuickBooks. For the codes, see the UK VAT codes in Xero reference.