How do I treat payments to non-vat registered traders so they do not appear in the Input box when I generate a vat return? Any help appreciated!
You don’t. Box 7 should include all purchases, not just the ones you paid VAT on.
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Gov.uk have official guidance which states not to include in Box 7: “income that’s outside the scope of VAT because it is not consideration for a supply”. This suggests that “all” is not quite correct. (Specifically I am wondering what to do with royalties I am paying to a non-vat registered individual.)
I have, though, realised that when creating a purchase entry on Quickfile I can state that it is “out of scope” by ticking the box at the bottom. This excludes it from Box 7.
Yeah, that particular line in the guidance always seems to cause confusion, even to accountants - all payments that are outside the scope of UK VAT (including things like payments for things you bought while overseas and thus on which you were charged another country’s VAT) or only those that are outside the scope specifically because they are not consideration for a supply (and why did they use the word “income” when box 7 is all about expenses). But I believe what I said still stands, you should include all purchases in box 7, but not things like wages or payments that are “not consideration for a supply” (i.e. that are not purchasing anything).
(Usual disclaimer, I’m not an accountant, consult one if you want a professional opinion)
@ian_roberts is correct, you should include all taxable purchases in Box 7, irrespective of whether you paid VAT on them or not. The only ones to exclude are “out of scope” which means things like wages, taxes, etc. Out of scope is different from not paying VAT. You’re only paying no VAT because your supplier is not VAT-registered, not because the supply is not taxable. There’s a bit of an explanation here https://www.gov.uk/vat-businesses/when-not-to-charge-vat
Royalties are subject to VAT and so should be included in Box 7
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