This is the first time I have done a Purchase Order for products imported from outside the EU, and I am feeling a little insecure.
How do these four guesses sound to you?
1) The products themselves are nominal code 5001 (Materials imported), and VAT code T0 (zero rated) so that they will show up on Box 7 in the VAT return, but not on Box 4, at least at this stage. (They can't have the VAT code T1 because if they were T1, when I came to pay the invoice it would record both the net cost of the products AND the VAT going to the American manufacturers, which is not what happens in real life. Another reason to believe T1 would be incorrect is that due to exchange rate fluctuations the amount of VAT at the time that Import VAT is charged is not exactly equal to 20% of the product cost.)
2) The shipping charge made by the manufacturers is n/c 5100 (Carriage Inwards), again T0 (zero rated). Effectively it is just another product but with nominal code 5100.
3) The Clearance Fee charged by ParcelForce definitely is zero rated for VAT, as it states this on the Parcelforce invoice. But the nominal code could be N/C 5101 (Import Duty), or you could argue it is simply an administrative fee paid to Parcelforce with a nominal code in the 7xxx range. Which would be better?
4) I am most unsure about the Import VAT itself. I am told by HMRC that it should go in Box 4 as Purchase VAT. So I assume it is initially the Purchase VAT nominal code 2201, later transferred to the VAT Liability nominal code (2202). Should I set up HMRC as a supplier and have them invoice the company? Or just do a journal, credit Bank and debit 2202?
