Do you invoice the customer in EUR or in GBP? In my explanation below I’ll assume EUR but let me know if this is wrong.
I’ll deal with the second question first: where is the VAT in your QuickFile nominal accounts. The answer is that when you created the invoice to your NL customer this would have created (at least) three nominal entries in QuickFile:
- the net amount as a credit on the sales code (or codes, if it’s a multi-line invoice)
- the 21% VAT amount as a credit on the “sales tax control account”
- the gross total of both of these as a debit on the “debtors control account”
All of these values will be the GBP equivalents of the EUR amounts based on the exchange rate on the date of the invoice.
When the customer pays you that payment creates a credit on the debtors control account and a debit on the bank account into which you were paid.
There will probably also be an entry on “currency charges” for the currency variation, i.e. the difference between the GBP value of the EUR invoice total on the date of the invoice and on the date when you were paid.
With UK VAT, what QuickFile does when you run a VAT return is to add up all these individual sales (and purchase) tax control account entries and create a journal that clears the relevant amounts off the control accounts and puts the balance onto “VAT liability”. When you pay HMRC it clears that liability account. So you will have to duplicate this manually for your NL VAT. When you come to do your NL VAT return you will have a list of sales and purchases on which you need to pay the VAT. For each of those sales you need to find out how much GBP value went onto the sales tax control account when the invoice was created, add all those up, and use that as the value for your VAT journal - this may be different from the value you would get by simply converting the EUR total sales VAT from your NL VAT return at today’s exchange rate. I don’t know how easy it is to extract that information from QuickFile as I’ve never tried doing sales invoices in anything other than GBP, it may be something you can get by exporting the specific sales as a CSV or you might need to dig it out of an account backup using Excel.
The journal you’re aiming to create is
- debit sales tax control for the GBP total sales VAT on your NL invoices
- credit purchase tax control for the GBP total of any NL VAT you’re reclaiming on purchases
- credit or debit the balance to either the same “VAT liability” nominal that QuickFile uses for UK VAT, or create a new one from your chart of accounts to keep the two separate.
Now when you pay the Dutch tax man you somehow need to map the EUR amount you sent him to the GBP amount you calculated for your liability. It may be possible to do this with “something not on the list” but if that doesn’t let you specify the exact GBP amount then it might be better to make a GBP-denominated bank account rather than a plain nominal account for your NL VAT liability, as I know you can definitely specify the exact EUR-GBP conversion when you tag the outgoing payment as a bank transfer.
You’ll then need to record a currency loss/gain on your EUR bank account in order to account for the drift between the EUR exchange rate when you incurred the liability and the rate when you paid it off.
Yes, multi-currency is a pain to deal with…