Hi
I think I have been completely lied to by AI (Grok) !!! And now I’m very confused.
I have a UK import/wholesale company
AI told me to make separate purchase orders with no value of goods, just the amount which appears on my Postponed VAT Import Statements in order for Quickbooks to collect the total amounts, however these amounts also appear in box 1’s total of VAT.
Also I’m confused with the help sections of this website that seems to say I should adjust the sales invoice VAT to that of the postponed VAT statement. How can this be right when I am charging and getting paid in advance for the VAT which is often quite different, than the VAT appearing on the Postponed Import. Wouldn’t some quarters I end up with more VAT money in my pocket, and other times less?
Any pointers much appreciated!!
Thanks
Steve
Quickbooks or QuickFile? This forum is for the latter.
How are you recording the original purchases where you deferred the VAT? There’s an option to log the VAT at that point in the same way that EU acquisitions used to work - declare what the seller charged you in the net column, set the UK vat rate and it will add on the vat at the line level and then take it off again at the invoice total - this leaves the total as it should be but adds the calculated UK VAT to both boxes 1 and 4.
This should have already accounted for all or most of your import VAT so when you get your statement you only have to check for any discrepancies like where you recorded a foreign currency purchase at a different exchange rate from the one HMRC used for their VAT calculation, etc. and correct those with a manual adjustment to both boxes on your return.
Hi Ian
Thanks very much for your response, it is much appreciated.
Sorry I mean quickfile (And if it makes any difference which I think it does, I’m currently using the free version which does not allow you to convert purchase order into a purchase invoice)
I think I’ve worked it out, but would love your confirmation.
So I import products from Dubai and USA and pay in advance in GBP. If I am correct, I can simply raise a purchase order with zero VAT on it, then once I have the Postponed VAT statement from HMRC, I can add that to the purchase order and select ‘Postponed Import VAT’ and then when quickfile prepares the report that seems pulls the information correctly. (I guess I just need to be mindful of changing the date of the purchase order, in case the shipment hasn’t arrived and HMRC have not displayed the Postponed Import Statement, within the same period of raising the original order?)
Does that sound ok to you?
Many thanks Steve
What QuickFile calls “purchases” are actually the purchase invoices - QuickFile does have a purchase orders feature but it’s hidden by default and you have to enable the feature manually with a toggle in your account settings. Purchase orders are only needed when your supplier specifically asks you for one, they’re a way to communicate to the supplier exactly which items you want to buy. The purchase invoice (just “purchase” in QuickFile) is something that you only create once the supplier has sent you their invoice, it’s how you record that supplier invoice in your books and declare the VAT, and it should match what the supplier charged you.
If it were me I would record the advance payment as just that - a pre-payment to the supplier which is held on their account until there is a purchase (invoice) to which it can be assigned. No need to create a purchase at this stage. Once the supplier sends me an invoice then that’s when I would create the purchase record in QuickFile, using the supplier invoice amounts as the net value, setting the correct UK VAT rate for each item, ticking the postponed VAT checkbox, and doing “log payment → apply from credit” to assign the pre-payment to this purchase.
When I receive the HMRC statement then I’d check the values on the statement against the QuickFile-calculated VAT for each purchase, and if any of them don’t line up then I’d either
- adjust the VAT column on the original purchase (if it hasn’t already been locked by a VAT return), or
- credit-note the original purchase, holding the funds on account, and then create a replacement purchase with the corrected VAT as per the statement and again “apply from credit” to mark it as paid (both the credit and the new purchase can be back-dated to the date of the original purchase, they’ll both be picked up automatically and the adjustment applied next time you do a VAT return), or
- make a note of the discrepancy and then apply it as a manual adjustment on the next VAT return. The adjustment would be to both boxes 1 and 4 so it won’t change the liability