VAT on interest

[REY]

Hello

I was doing the VAT return and find that interest element was included as income and VAT calculated on interest element. Which is not correct.

How to solve the issue. Interest was tagged as bank interest received.

Thanks

[QFMathew]

Hi @REY

Can you clarify how the transaction was tagged, please? For example. was it tagged directly to the nominal (using “Something else not on the list”), or was it done as an invoice?

[REY]

Hello Mat sorry for my slow reply. looks like it was created as an invoice.

[QFMathew]

Hi @REY

In that case the invoice is being picked up as part of the VAT return.

You can either update the invoice marking it as “VAT Exempt”. This will include the value in box 6 on the return, but it would be a net value (£0.00 VAT).

I’m not a qualified accountant, so it’s always worth double-checking with yours to ensure it’s treated and recorded correctly.