I have a tricky one. One of my clients purchased some goods from a company in Dublin and paid for it by credit card. When I came across the invoice to post, it had the Irish 21% VAT included. I was pretty certain that this should have been zero rated and when I telephoned them they admitted that it should have done. The woman I spoke to said they couldn't refund the VAT amount (why not?) and that they would put it as a credit on our account and send us a statement to that effect.
How do I now deal with this from a bookkeeping perspective? Should I just post the gross amount of the invoice and not include VAT? (Using Quickbooks).
I had a similar situation from an invoice form germany, they did charge 19% VAT and my client had to reclaim it back, apparently the show that he did you could claim back the VAT via the German company but it was very long winded. Anyway I put it on as Zero VAT and the accountant never question it so I presume it was correct. So if it was me I would put it on as Zero VAT just to be on the safe side. I don't see why they should have just simply not sent you a cheq for that amount as technically its there error, what if you don't buy from them again, you don't want a credit left on the account?
HTH
-- Edited by Amanda on Saturday 13th of November 2010 07:38:57 PM
Thanks for replying. No, I can't see why they couldn't have refunded the VAT, but I wasn't in the mood to argue...lol Fortunately my client probably does intend to use them again so we'll get it back that way. (Hopefully they'll get it right this time).
I'm confused about all this zero rated invoices from countries in the EU and reverse charge VAT (which I've never understood). When I phoned the HMRC VAT helpline about this problem they said I should account for it under the reverse charge. He told me it was just a paper exercise and that I should enter the amount in box 2 and box 4.
Is there a definitive guide for VAT in EU countries somewhere?
If you buy something from another country in the EU and you do not supply your vat number they then have to charge you vat (depending on the goods/services supplied)
If you later give them your vat number they will give you a credit for the vat charged and you account for it on your vat return in boxes 2 and 4 (reverse charge). The next time you buy from them they will not charge you vat as they have your vat number.
If you buy goods from another business in the EU and the goods/services attract vat in most cases you can claim back the vat suffered.
As for a definitive guide for vat in EU countries what do you want to know?
Welcome to the forum! Thanks for the info. I'm not sure whether my client supplied her VAT number at the time, so something to look into. Unfortunately it's now got even more complicated as the original invoice shows it was for £85 something which my client paid by credit card and then we got a statement showing 103 Euros. They apologised for this and said their software defaulted to their base currency. Anyway, when we received the credit card statement, it showed that my client had actually paid £93 something! So I have sent another email and they are looking into this as well!
As for the vat guide, didn't want to know anything in particular, just wondered if there was some sort of general guide I could use when I come across situations like the one above!
