You should post the invoice based on the exchange rate at the time of supply - although, really, nobody is going to quibble if you use the exchange rate at the time of posting given what happens in a mo...
When you post the payment, you post the amount that is being paid in GBP (for obvious reasons).
As you note, there will most likely be a difference on the account due to the exchange rate changing. This difference should be posted to a nominal code that tends to be set up in Sage by default, called "Exchange Rate Variance".
That's the purpose of the code - to deal with cases where the exchange rate has changed between entering an invoice and the payment against it.
As for the VAT issue, IIRC Danundaland** doesn't have VAT, but something called GST (Goods & Services Tax). When I've purchased goods from Australia (mainly DVDs when the exchange rate has been particularly favourable), because I'm buying from good old Blighty, GST isn't charged. However, if it has been charged, it's not something you'd be able to claim back as VAT because it isn't VAT.
Whether your client's supplier should have been charging it to him in the first place is another matter. I note it's for services, and I have a sneaking feeling that means he does have to charge it and your client has to lump it (since the service, presumably, is entirely within Danundaland**) - but this is really something for the tax experts amongst us to answer.
** AKA Australia.
-- Edited by VinceH on Thursday 31st of January 2013 11:11:10 AM
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Vince M Hudd - Soft Rock Software
(I only came here looking for fellow apiarists...)
Ive just come across the bookkeepers forum site, looks like a great site! I wonder if anyone can help??...
A client we do bookkeeping for has a supplier who provides services for them from Australia.
The invoice we have received is in Australian Dollars and because of the varyingexchange rate(from day to day), I am not sure what amount to enter the invoice as. Because by the time the invoice has been paid the price of dollars would probably have changed.
Also they are purchasing a service from a non EU Country, and as I believe there are a number of grey areas of what VAT can be reclaimed because of this. (I havent had much experience in this area) The vat has been shown on the invoice if this helps at all...
Could you please provide some assistance to what amounts I should enter into sage and also how the VAT should be treated?
