My company is VAT registered and I have purchased some components from a supplier in the EC. I supply my GB VAT number with the orders and they pay the VAT on my behalf when they invoice me. This saves me reclaiming the VAT.
The VAT is therefore shown as zero on the invoices they send. I have paid the invoice total as shown which is goods only, no VAT.
I assume it is correct to mark this supplier as “VAT Registered in another EC Member State” but what should I put as the Default VAT rate, 0%, 20% or whatever the EC VAT rate is?
That’s not how EC acquisitions work. Yes, the supplier will invoice you at zero VAT, but you still have to account for the VAT yourself at UK VAT rates on your VAT return. Fortunately QuickFile does support this natively if you configure the supplier as “VAT Registered in another member state”.
When you record the purchase in QuickFile you need to tick the (mis-named) “apply VAT reverse charge” checkbox, and set the VAT rate to whatever is the appropriate rate of VAT if you were buying the same thing from a supplier in the UK (probably 20%, but I personally have to list every line individually as some of the things I buy are standard and some are zero rated in the UK). QuickFile will show it as the VAT having been added on to each line and then taken away again in the footer, leaving the overall total equal to what you were charged at zero rate by the supplier.
When it comes to your VAT return QuickFile will put the VAT in boxes 2 and 4 (so it doesn’t affect your overall liability) and the net in boxes 7 and 9.
I did as you suggested and went back into the purchase invoice to select “apply VAT reverse charge”. The amount I paid is £67.17 so QuickFile made the subtotal £55.98, VAT £11.19 and total £67.17.
However, the VAT is deducted at the bottom as you described so the balance is £55.98 which doesn’t match my bank payment and so I can’t tag it.
What should I do - adjust the line subtotal to £67.17 so that the balance on the invoice matches the bank payment?
What you need to do is set the net column to the amount the supplier actually charged you, let QuickFile add the VAT on top of that net, and then take it off again at the bottom. So you’ll want net £67.17, QuickFile will add £13.43 VAT at the line level and then take off £13.43 VAT at the bottom as “EC VAT exemption”, leaving the final total as £67.17.