VAT Return entries on foreign purchases

When making foreign goods purchases we enter that country’s particular vat rate (e.g. Sweden: 25% or 6% or 12% depending on goods) into the purchase invoice section. We also enter certain transactions as VAT exempt because these are classified as Zero Rated Exports for VAT purposes when we buy goods for resale in the UK. However, when compiling the quarterly VAT returns , any of those goods that have subsequently been sold in the UK have to be manually adjusted to read 20% VAT as VAT is due on those products at the rate applying in the UK. We are entering the goods as General Purchases just as we would foreign purchases that are not being resold in the UK…perhaps this is where we are going wrong?

I’m not sure I follow you here. it shouldn’t be necessary to make manual adjustments to the VAT return as the software will automatically calculate the VAT receivable on purchases and the VAT due on sales independently. If you check the backing report you will see the NET and VAT totals for all your sales and purchases itemised.

Thanks for looking at this. When I made out the first quarter return , I found that QF was using the 25% Swedish vat rate applied to all the purchases (where VAT exempt tick box was also applied) for the acquisition rate instead of converting to 20% , which is what is due. I had to manually change the settings to 20% and then the automated VAT return worked successfully . Could you examine a test case perhaps to see if you can replicate what’s happening?

If you are making a purchase for items in Sweden and your supplier is exempting the VAT then it should show the reverse charge as per the footer breakdown here. The VAT goes on the return and back off again.

Appreciate the way the exempt VAT works and the reverse charge, but the crucial aspect was clarifying that you have indeed used the UK 20% vat rate in the vat column rather than the Swedish rate (i.e. QF doesn’t automatically convert the foreign vat rate on exempted goods to UK vat…we have to enter it as UK vat rate). Great to have this clarified …Big Thanks!

At the moment you need to select the 20% UK VAT rate, there are some VAT changes that will updated in this area.

Thanks Joe…that’s got it! Much appreciated .

This topic was automatically closed after 7 days. New replies are no longer allowed.