EC Purchases VAT not paid to supplier declared on VAT return

Accounting
1

Hi,

Been a while, but I can’t see the answer I want in the forum. I have created a supplier and ticked the box for them as EU. I have entered their invoice which is without VAT as we are VAT registered.

Will the VAT due to Purchases from EU automatically appear in the VAT return? I’m sure it will but having not filed on here yet I haven’t seen it in practice.

My how Quickfile is growing! Well done guys :smile:
Jules

1 Like
2

Hi Jules, good to hear from you!

If you are purchasing services from a VAT registered EU company where they have exempted the VAT, then the way to enter this in Quick File is actually to add the vat at the rate it would have been charged if the purchase was made in the UK i.e. 20% and then click the VAT exempt box on the invoice. Here’s an example for a purchase made to Google (Ireland):

758×649 26.6 KB

As you can see in the footer the VAT appears and is then reversed. This will reflect in boxes 2 & 4, 7 & 9 on the VAT return. You can run a VAT return (without submitting) anytime to test this, if you are on cash accounting then the invoice will need to have been paid to feature on the return.

Let me know if you have any further doubts.

1 Like
3

Hi Glenn,

Thank you for the warm response. Good to be trying to get back into figures and accounts, I think!
That’s quite self explanatory thank you.
Can I clarify that where the VAT rate is higher in the supplying country say 23% the amount calculated for the VAT return would be at the UK Rate of 20%? in Box 2?

4

Hey @Joe any ideas on this? Sorry I don’t know how box 2 is calculated in relation to EC acquisitions… you could run a test and see where the figures are entered on the return.

5

That’s correct Jules, the VAT would be calculated as if the purchase was made in the UK, therefore you take the net cost and apply 20%, as shown in the above example.

6

Hi Joe Glenn,

Unfortunately the VAT return for Box 2 is calculating incorrectly. It is simply adding up the VAT element that you have credited out at the rate for the specific country. What it should be doing is calculating the VAT element at the UK rate on the Purchases made from the EU set out in Box 9.

VAT due on EC aquisitions 2
£1,566.96
Total value of acquisitions from other EC states exc VAT 9
£7,055

20% VAT would be £1411.00.

This needs to be corrected I’m afraid or are you saying that I should not enter the actual VAT rate for the country purchased from and only enter the UK rate. This would work but I am not sure this is what was meant for me to do in the first place?

Cheers Guys.

7

That’s correct and this is correct the process, as stated above, the VAT needs to be accounted as if the purchase was made in the UK, therefore you enter the net amount of the EC purchase, with the VAT rate of 20%, as shown in the above example.

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Thanks joe, yes now I’ve re read it again with less tired eyes that’s exactly what Glenn wrote. Apologies.

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No problem Jules, I’m sure this posting will help other users.