I have looked through the topics but can’t find an answer to my query. I am registered to reclaim allowable EU VAT from purchases/receipts in the EU. However, how is this accounted for in QuickFile? Imagine the purchase is EUR100 which includes EUR20 VAT (from an EU member state)… Perhaps the GBP equivalent of the EUR100 is entered with zero VAT and then the EU VAT reclaim is made when is it due to be made, later on, but then the amount received has to be accounted for somehow…
Wondering if anyone has any thoughts about this?
You could try something like this: create an “EU VAT” category either as a new nominal under assets & liabilities, or a new bank account, and on the settings for that nominal in the chart of accounts enable it to be used on purchase invoices. This would then allow you to split the purchase record into two lines, both at “no VAT”, one for the net cost of €100 posted to the usual expense category, and the other for the €20 VAT amount posted to your new “EU VAT” nominal. You should probably mark the purchase as out of scope so it isn’t included in your UK VAT return box 7 total. When you actually complete the reclaim you could tag that as a “transfer between accounts” if EU VAT is a bank account, or “something not on the list” if it’s a plain nominal to balance it out.
The only issue is the exchange rates - all nominal accounts in QuickFile are GBP denominated so the amount you eventually reclaim may not match the amount you originally put on the EU VAT nominal due to currency fluctuations. You may find you need to manually journal the difference to “currency charges” to get it all to line up.
Many kind thanks @ian_roberts, it makes sense but just one thing doesn’t quite add up for me.
If I set up an asset liability nominal ‘Reclaimable paid EU VAT’ and create the purchase invoice with total purchase expense of €100 Plus ‘Reclaimable paid EU VAT’ of €20 (debit), on the second line, then the total is €120.
I make/have made the transfer of €100 from the bank account to the EU supplier for total payment of the goods. Later on, I reclaim the €20 which is paid in to the bank account. To account for this €20 I select “something not on the list” and credit the ‘Reclaimable paid EU VAT’ nominal which balances out the ‘Reclaimable paid EU VAT’ nominal with €20 credit and €20 debit, thus cancelling out in the Chart of Accounts.
However, the purchase invoice had been tagged with the €100 leaving it as part paid, with the €20 remaining. So then I am missing something…
Sorry, I mis-read your original example, I was working on the basis of the purchase being €100 plus €20 VAT, rather than including €20 VAT - so your purchase record would be €80 for the net line and €20 for the reclaimable VAT, giving a total of €100.
That makes sense, many kind thanks indeed @ian_roberts