We are having an agricultural building built for storage of machinery. I understand we cannot claim the purchase price of the building but we can claim back the VAT as we are cash accounting and VAT registered. Can anyone explain where the tickbox “reclaim VAT” is that has been mentioned in other topic threads. I have tried raising a dummy purchase invoice and there is no option to tick a VAT claim box when inputting it as a capital asset. apologies I am new to this
Since you are using the
Cash Accounting VAT scheme, you will reclaim VAT when you pay the supplier, not when you enter the initial purchase invoice. There is no “reclaim VAT” checkbox on the purchase invoice itself because the VAT reclaim process happens when the payment is tagged to the invoice.
Here is how to properly record this in QuickFile:
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Create a purchase invoice: Log the capital asset purchase by raising a purchase invoice for the full amount, including VAT. Use the appropriate capital asset category (e.g., ‘Land & Buildings’) and select the correct VAT rate (e.g., 20%). This records the full invoice, including the irrecoverable cost and the VAT.
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Tag the payment: When you pay the supplier, record the payment in your bank account and “tag” it to the purchase invoice you just created. QuickFile will automatically handle the VAT reclaim when the payment is tagged, as is required under the cash accounting scheme.
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Adjust for irrecoverable VAT: You must create a journal entry to handle the portion of the purchase price that you cannot claim back, such as the building itself. This moves the amount related to the irrecoverable capital asset out of the VAT control account and posts it to the correct balance sheet category (e.g., a specific “Land & Buildings” nominal code). Since you have already entered the full invoice, a journal entry is the best way to correct the accounting treatment. You may need to create a two-line purchase entry, one for the VAT-reclaimable elements (e.g., machinery) and another for the non-reclaimable elements (the building).
