I have forward bought US$ through a broker (World First) against 2 specific invoices (deposit, balance) to a company in Taiwan. So the full amount went from my bank account in UK£, converted to US$ by World First) this VAT quarter. One invoice, for 30% of the total, has been paid in this VAT quarter. The rest will be paid in February 2023, in our next financial year. Please, how do I reconcile that in this quarter? Obviously no VAT applicable at this point. thank you!
Do you have a USD bank account in real life and in QuickFile?
Where the rest of the USD currency you bought is sitting now in real life?
Here is an example of how it would be processed
- £100 Money out from your bank (30/70 split (deposit, balance))
- £100 tagged as Transfer to USD account
- Raise Invoice for the £30 deposit and pay it using the USD account
- Raise Invoice World First for the conversion fee and pay from GBP bank if that was where it was paid from (if applicable)
- Raise Invoice for the £70 balance and pay it using the USD account when this is relevant
Hi Steve, thanks for the response.
A total of £48,000+ was sent to World First in February, converted to approx US$55,000. In April I paid an invoice for approx $16,000 to a supplier from those funds, leaving approx $39,000 in World First. This balance will be paid out in February 2023, the next financial year.
There was no specified conversion fee, it was absorbed into the overall transaction/conversion rate.
But it’s not my company account per se, it’s the broker’s account.
Sorry to be ignorant. I just need to get this right, I’m always nervous of HMRC!
Tel: 01751 417371
I have outlined the steps for you below,
Set up a Merchant account in your banking screen
Record the payment to World First
A total of £48,000+ was sent to World First in February, converted to approx US$55,000
- Tag the transaction as Transfer between accounts, select the holding account and enter the amount received in USD ($55000)
You now have your$55000 sitting with World First
- Paying the supplier
In April I paid an invoice for approx $16,000 to a supplier from those funds, leaving approx $39,000 in World First.
Set up there account, raise the invoice and payment as you would any other supplier (but use the holding account for the payment).
And to add to this, once you have paid the second instalment and exhausted the US$ balance, you will probably need to use the option to record a currency movement in the US$ bank account settings - this is because the different exchange rates used at different times mean that even though the US$ account shows as zero dollars in QuickFile it will probably still have a non-zero GBP value on the balance sheet. The currency movement tool will zero the GBP balance to match, putting the contra entry as currency charges.
Thank you Steve, you are a star. I’ll have a crack at that this afternoon
Tel: 01751 417371
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