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EU VAT accounting for goods and services


#1

When I try to enter a purchase from an EU VAT registered supplier who is from outside the UK, the only option available is to apply a reverse charge which is fine for purchase of services but not for goods. There should also be a check box to exempt VAT which will populate the correct box 9 in the VAT return but this option does not appear to be available. Please help.


#2

The “reverse charge” option in QuickFile is actually what you want, as it in fact applies the rules for acquisitions of goods, not reverse charge of services (i.e. it puts the VAT in box 2 and the net in box 9). You put in what the supplier charged you as the “net”, select the VAT rate that would apply to the goods if they were sold in the UK (usually 20% but might be “no vat” for food, children’s clothes, etc.), and tick the so-called “reverse charge” checkbox, and it should appear correctly on your VAT return as an acquisition.


#3

Thanks Ian but what do I do then if it is services that I purchase and not goods?


#4

Currently the only option is to make a manual adjustment on your VAT return (this is something that has been reported to QuickFile staff as a bug several times - by me and other people).

What I do for services is to put them through the same as goods, but make a note (using a project tag) so I can find them when I come to do a VAT return. On the return I use adjustments to move the VAT for these purchases from box 2 to box 1 and the net amount from box 9 to box 6. Thankfully this doesn’t affect the overall total VAT so there’s no need to adjust anything other than the return itself.

(In my case the only purchases this applies to are monthly transaction fees from Stripe so I only have three purchases per quarter that need adjusting)


#5

As Ian_Roberts said this is what we do as well. We export the VAT return into excel to perform various other checks. One of which is on EU purchases we goods and services so that we have a list of those transactions we are adjusting. From box 9 to 6, as well from box 2 to 1, as fortunately QuickFile only provides for the amount adjusted and you need to be able to demonstrate if you had a VAT inspection how you arrived at the adjustment.

A similar issue also happens when you sell services to the EU as you need to reduce services in box 8. QuickFile just doesn’t handled EU service transactions effectively.


#6

@Andreproberts absolutely, I do the same - I “download calculations” on the initial QuickFile-calculated VAT return, work out what the adjustments need to be, apply them, “download calculations” again and then annotate each purchase that I had to adjust and upload a copy of the annotated calculations into my document manager area for future reference.


#7

I never had a VAT inspection, but I document my accounting procedures (e.g. how to handle and account for expenses for pro bono activities I do, professional expenses that are reimbursable by clients, payroll, and VAT workarounds for using Quickfile) in a central accounting procedures electronic document.

I am of the opinion that when a VAT inspection comes around, that that documentation, together with notes I add to each VAT adjustment for each quarter, will be sufficient to document the pattern, alleviating the need to document each and every invoice that is affected. Especially because it involves only reporting in different boxes, not VAT due adjustments.

Regarding Quickfile’s roadmap on the issue, Glen, the co-founder told me that they assess the situation until Brexit and its associated agreements become clear in the next few months, before a fix will be implemented. A position I can understand, in order to save potentially unnecessary development costs.

Regarding EC sales lists - something that not everyone needs to fill out - there is an issue with the reporting button showing up only when you sell goods to EU member states It DOES NOT show up when you sell only services. For that there is a workaround requiring you to use the following direct link

/secure/reports/vatReturns/ECSalesForm.aspx?vatID={vat_return_id}

to access the EC Sales list for the given VAT return id. Get the id from the URL you see when you are looking at the VAT return in Quickfile. It is NOT the correlation ID you see from HMRC.

HTH,
Michel


#8

For VAT returns done on a different frequency to EC Sales Lists then you get no help with the EC Sales List from Quickfile unless you project tag or specifically use an EU sales journal that you can copy from when it is EC Sales List reporting time. I do both to reduce the chance of omission or putting in wrong journal.

Re above comments, taking the VAT return and putting it into a spreadsheet for adjustments. Be careful that is compatible with MTD when the time comes. HMRC have effectively said no manual fiddling with numbers. Just something to look out for when it comes.


#9

Sure.

But I never claimed that my approach would work for every situation - only mine.

Regarding MTD, Quickfile says it is officially registered as MTD provider, so I expect Quickfile to comply with HMRC requirements. The current workaround is still ok pre-MTD, and as I said, it is only until the Brexit situation is resolved.