Joanne... the purchase invoice for the actual goods (the one that the Chinese company would give you) will be posted as T0. When you post the duty invoice, you will post the duty/admin fee as T1 but change the VAT to be whatever has been actually charged
The addition of these T0 and T1 net balances, should give a higher 20% calculation than the VAT you have claimed.
Hope that makes sense!
-- Edited by FoxAccountancyServices on Monday 30th of September 2013 05:52:01 PM
I have just done the VAT return for a newco who have imported goods from China.
I have entered the purchases using the invoice the Chinese company supplied (and using the VAT rate from HMRC's monthly update via their website.
The VAT reclaim for these purchases has been done from C79.
However I have now received this message on my first VAT return:-
Based on the current rate of VAT, the amount you have entered in Box 4 exceeds the amount HM Revenue & Customs would have expected you to declare in comparison to the value you have entered in Box 7. This could be correct if you are making an adjustment to a previous return, or have understated the value in Box 7. If you want to amend your return please click the 'Back' button below and change the amounts you have entered, alternatively please click the 'Submit' button to proceed.
Box 7 is £18528 and Box 4 is £3747. Im wondering if the freight agent has used a higher calculation for the VAT for the imports or included something else in there that I do not know about or could this just be done to exchange rate differences?
Im at a loss to know what to do - can anyone help please (the VAT return is due today!!!!!!!!!!!!!!!!!)
If I send it with this message on it will it prompt a VAT inspection?
__________________
Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
Hi Hal
I also have put other purchase invoices through the VAT return, so the actual difference in relation to the imports alone is around £239.
All the Logistics companies invoices match exactly to the C79.
My problem is that I dont know how they arrived at the import VAT figure in the first place and based just on the invoices from China my client has been overcharged VAT, although unlikely, so Im wondering if there may be something they have charged for but my client hasnt got the info (eg transport costs etc) and how I would get this info (Im going to try ringing the Logistics company now but want to just check if Ive missed any other angles as Im a complete novice in this area!
Appreciate your help!
__________________
Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
Hi again Hal
Just managed to speak to the Logistics company and they are vey kindly going to send me the full breakdown of how the VAT has been calculated (according to the set Customs process). Not sure yet how I will process it through sage but at least I should be able to understand how they got to the figure!
__________________
Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
Hi again Hal
Just managed to speak to the Logistics company and they are vey kindly going to send me the full breakdown of how the VAT has been calculated (according to the set Customs process). Not sure yet how I will process it through sage but at least I should be able to understand how they got to the figure! Fingers crossed.
__________________
Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
I now have the information from the Logistics company - the VAT is calculated on:-
Invoice value eg £668.09 Duty £26.72 Vat value adjust £120.00
Total VAT value £814.81 at 20% = customs VAT is £162.96
I know where most of the figures come from - all EXCEPT - what is the VAT Value adjust??? I understand this is something that is adjusted for a freight charge at xp per weight of the goods and depending on how they are brought into the country (sometimes with a minimum charge).
What I dont know is how to allow for this in the accounts and how to key it in Sage.
Plus Ive keyed the Duty as T0!!! So Ive missed VAT on this.
Help.......please?!!
__________________
Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
from memory you need to key in the different elements of the invoice separately.
VAT bit is T1 and goes in the VAT column so the VAT report will pick up this as solely VAT.
Duty is T0 and put on the usual way.
Normally if its a DHL invoice then it will have the duty, VAT and admin charge listed separately on the invoice.
On the DHL invoice I don't take the total amount and then do 20% on that, what you need to do is input it on Sage exactly as it is on the invoice from the logistics company. You shouldn't have to need to work out the VAT. Then the VAT element should match the C79.
This is why you have got too much VAT on the Vat return.
Hi Amanda
Thank you for your explanation - this one is a bit weird though as the VAT adjust fee is only showing on the C88 entry acceptance advice that Customs have (and now I have a copy).
The logistics company explianed that they do an adjustment and Ive dug around and found out that the VAT adjust fee is an adjustment allowable for Airfreight at xx weight x 40pence (as allowed under Method 2 of the import calculation in section 3.1 of the HMRC Import Notice 702) - thats where my difference lies.
The Invoice from the Logistics company only contains Import VAT and Duty, no other fees whatsoever. The import VAT on their invoices matches the C79 (although I keyed the import duty as T9 so I will adjust this and that helps a bit!). But the only remaining issue now is where my VAT return is incorrect is in the Import VALUE of the goods ie the VALUE that HMRC have placed on the goods following the info supplied by the logistics company.
I have an invoice from China and that all matches up to the logistics company/C88 form so apart from that I just need to put something in somehwre for this VAT value adjust figure.
Hi Michelle
Oh gosh this was not a good one to learn on (or maybe it was).
Unfortunately I havent got an invoice for an admin fee. The Logistics company have used the Chinese invoice to value the goods BUT on top of that have added in an estimated cost of freight using the HMRC's own acceptable method for calculating the import VAT.
This is not something that perhaps would normally be picked up - Ive only picked it up with this customer as there is so little on his VAT return, hence it seemingly being out of balance.
We will never get an invoice for the freight, as its just a 'valuation for VAT purposes' figure/the logistics company will not pass it on and its actually been covered by the Chinese (unusual but my clients are connected, apparently!!)
HMRC eventually answered their phone and have confirmed that it is not an issue for this imbalance in the VAT return and it will not prompt an inspection as they can see they are importing and they accept this will happen a lot with imports, given the arbitrary valuations used - as long as if there ever is an inspection that i can show I have only processed the import VAT and DUTY from the C79 and claimed the Chinese invoices in box 7.
I did not key the import duty as T1 so will need to go back and adjust that but everything else looks ok - will double check. AAAAAGGGH - given me a massive headache.
__________________
Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
Basically the difference between the VAT and the amount paid, is what you put as the net.. don't get to hung up on VAT codes.. as long as the correct net and the correct VAT are on the return, that's all that matters
