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Overriding VAT

I deal with a lot of European suppliers where the VAT rate varies country to country (eg at the moment I am dealing with Spain with 10% and 20% VAT) How do I Overwrite the VAT amount?

In most cases, if the European supplier knows you are VAT registered in the UK and you’ve given them your UK VAT number then they shouldn’t be charging you any VAT at all. If they have charged you non-UK VAT then you can’t reclaim that on a UK VAT return so you’d enter the total amount as the net and select “no VAT”.

If you’re buying goods from the EU the supplier should give you a zero-rated invoice. You set the supplier up in QuickFile as “VAT registered in an[other] EU member state”, and enter the purchase with the net as the amount they charged you, select the VAT rate that would apply to the same goods if you bought them from a UK supplier, and tick the checkbox that is (incorrectly) labelled “apply reverse charge”. This accounts for the VAT using the EU acquisition tax rules, putting the VAT in box 2 and the net in box 9 (you also reclaim the purchase vat in box 4 as normal, so it doesn’t cost you any extra overall unless your business is partially exempt).

If you’re buying services you need to use a similar but slightly different procedure which is (really, this time) called the reverse charge. This is almost the same as the acquisition tax procedure except the VAT goes in box 1 instead of 2 and the net goes in box 6 instead of 9. There are other posts on here discussing various ways to enter this in QuickFile until they get around to adding proper support - the simplest is probably to enter it as if it were an acquisition and then manually adjust your VAT return to move the box 2 number to box 1 and the box 9 to box 6.

But step one in both cases is to tell the supplier you are registered for UK VAT and see if they will re-issue your invoice without adding their local VAT on top.

Thanks for this - I purchase primarily services (hostesses, tours, etc) - my supplier has advised they cannot charged zero rated as they are ‘loose services’ (I am trying to get a definition of this). Therefore I cannot see how I can reclaim this tax if I cannot break it out on my supplier invoice (which it would appear I cannot do for overseas transactions that are not 20% or 5% (these are 10 and 21%)

You can’t reclaim non-UK VAT on a UK VAT return full stop, even if co-incidentally the overseas VAT rate happens to be 5% or 20% - you’d have to register for VAT in the relevant country.

If you’re buying services like tours in order to re-sell them to customers at a markup then you might be better off using the Tour Operator’s Margin Scheme (where you pay UK VAT on the margin rather than overseas VAT on the whole sale), but if you want to go down that route you’d better talk to an accountant who knows that scheme.

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