Hello,
Would it be possible to be able to enter exchange rates accurately for invoices in foreign currencies, i.e., not limited to four decimals?
It’s too few digits to get the correct amount down to pennies to match the amount actually paid at the exchange rates in operation.
Alternatively, entering the actual GBP amount for the invoice as calculated using the bank’s FX rate would also work.
Kind regards,
Thomas
No. At least it’s certainly not something that would be wise if you’re VAT registered.
Unless you’ve specifically agreed otherwise with HMRC you must use either the HMRC published rates or the open market exchange rate when converting your invoices to sterling for VAT purposes. If the payment you receive does not match the GBP value of the invoice then you can treat the loss or gain as a non-VATable expense or income, and QuickFile handles that for you when you log cross currency payments, putting the difference on “currency charges”. But you can’t just use a less favourable exchange rate to reduce the VAT you owe.
Thanks, Ian, makes sense.
However, If you supply digital services to consumers via a third party platform or marketplace, the digital platform is responsible for accounting for VAT on the supply instead of you. This is reflected in the marketplace contractual terms and conditions, too.
The marketplace accounts for any VAT. The amounts on receipts are denominated in USD, but converted to GBP by the marketplace net of VAT, which they have collected and paid, as required.
So you are effectively supplying your services on a B2B basis to the marketplace (which I’m presuming is not based in the UK? So your sales to them are zero-rated for UK VAT and the marketplace will reverse charge on their end as necessary), and they then supply them B2C (and charge the appropriate local VAT for the customer’s location) to the end consumer?
In that case surely the invoices you record in QuickFile should be zero rated and only for the net amount (in whatever currency that is), not the amount that the marketplace charged to the end consumer. That should be much closer to the real exchange rate and the odd few pennies or pounds can go to currency charges in the normal way.
Yes, the service is out of scope for UK VAT and the question is how to account for the net amount received from the marketplace.
The receipts for the net amount the marketplace provide are denominated in USD, the marketplace does the conversion at their FX rate and deposit the amount in GBP. There is no economic meaning or tax implication for using an interbank mid-market rate – although the spread could be accounted for on a separate line.
This topic was automatically closed 14 days after the last reply. New replies are no longer allowed.