Getting VAT Report to show (1) bank interest (Box 6) and (2) bank charges (Box 7)

[hcl]

Hi I am new. We are VAT registered (accruel) and so bank charges paid and credit interest received need to go on the VAT return. I’ve worked out that if I add the current bank account as a ‘supplier’, I can then create an invoice for each bank charge. Then in the current account, tag the bank charge as a ‘payment to supplier’ to get Quickfile to include it in VAT Box 7 (payments). However, I am struggling to do the same for interest received. I’ve created a new nominal code for interest received. Should I then create an invoice as a credit note (so enter a negative figure) in the bank’s ‘supplier account’, or do I need to create a ‘customer account’ for the bank as well and create a sales invoice, in order to get ‘credit interest received’ into Box 6 on the VAT Return?

[QFMathew]

Hi @hcl

I would double check this with an accountant (I’m not one) as generally bank interest and fees aren’t subject to VAT. These can normally be tagged directly to a nominal code without the need of a purchase invoice or supplier record being set up.

[hcl]

I have come from SAGE software, which does this automatically. So to changeover to Quickfile, I duplicated 3 months entries and made a comparison so these differences are revealed, as a sort of check system for myself more than anything else. I understand that bank interest and fees should still be included on the VAT Return, even though they are not subject to VAT themselves. I have also considered doing an adjustment on the VAT return itself. Surely this must have been discussed before - can anyone else shed light on this issue? Perhaps I will check with HMRC?

[QFMathew]

I would double check with your own accountant whether this should be included on your VAT return or not (I’m not one).

If you need them to be included however, you can create them as supplier invoices and record it as 0% VAT. This would allow it to be included, but wouldn’t affect the actual VAT calculation.

[hcl]

Thanks Mathew. My accountant says “whilst HMRC’s website might indicate that interest received is exempt this is only if it is received as part of the business. In your case it being received on bank accounts it is investment income and therefore outside the scope of VAT. As such it does not need to be declared on you VAT returns.”

[QFMathew]

Thanks for coming back to us @hcl! In this case, just tagging it directly to the nominal code using “Something else not on the list” should be suitable.