Our client owns a garage that provides MOTs as one of their services. We have noticed that if they raise a sales invoice for an MOT and additional parts the MOT element is included in the total sales figure in the VAT return even though it is out of scope of VAT.
We currently have to export the data to Excel and do a manual calculation to determine the total MOT sales to then deduct this from the figures submitted on the VAT return.
Please advise if there is a way round this?
Thanks in advance
Helen
Your client has to raise separate invoices for MOT charges and ensure that MOT charge is classified (for a VAT purpose) as “exempt” or “out of scope” and not 0% (zero rated items still form part of your total Vatable sales or purchases).
To activate “Exempt or out of scope for VAT purpose” setting go to “Client Management” area and select chosen client (here CLIENT1):
Next select “Modify Client Details”:
Lastly, select VAT settings “Exempt or out of scope for VAT purpose” and click “Update Details”:
Next time when raising an invoice for CLIENT1 QuickFile will offer additional VAT options on the invoice (exempt and out of scope):
EDIT
It is worth noting that if you client charges more for MOT than he is charged by MOT test center then the balance is VATable.
DISCLAIMER: I am not an accountant therefore refer to professional for further advice.
Hi
Thank you for your response. So am I right in saying that they would not be able to raise a sales invoice that has one line as 20% vat and another line as out of scope?
Also, if they have one client that purchases vatable and out of scope supplies they would need to set up two client codes with the different VAT options for the same client?
Thanks for your help
Helen
They would be able to raise an invoice that has one line with 20% vat and another line as “out of scope” however this way total value of the invoice will be included in the total Vatable sales.
With regard to purchasing both “vatable” and “out of scope items” the treatment will be the same as in case of sales.
“Exempt and out of scope for VAT purpose” option needs to be activated on the supplier level (Go to “Supplier Management”, select supplier, “Modify Supplier Details”, select “Exempt or out of scope for VAT purpose” and “Update Details”) and all exempt or out of scope items should be invoiced separately.
