I am fairly new to posting here but have been reading all the good advice for quite some time now!
I have a query relating to VAT on purchases from the EU and am looking for the correct information on how to deal with this.
A bar that I do book-keeping for has been sourcing drinks from Germany and the invoice shows the price plus 19% VAT added on the invoice.
I am currently using Sage for their accounts and am familiar with the reverse charge scheme, however I am not sure this applies to this situation. Could anyone with more knowledge than me, advise me on how they would treat this invoice when posting into Sage.
I assume the bar is registered for VAT. If so, then they need to notify the German supplier of their UK VAT number. The supplier then will not charge VAT.
When you enter into Sage, you will use the relevant tax code. You will need to check this; usually it is T8. It creates the additional reverse charge entry for you. When you run the VAT Return, you will see the Box 2 entry as well as the input tax, cancelling it out.
(Hope that's helpful. Do respond if you need more assistance.)
I should've said that yes the bar is VAT reg. I had informed the bar owner to forward the VAT number to his supplier but to date they haven't done it and the invoices (about a dozen this quarter) keep coming in.
It doesn't look like they will do this before the VAT for this month is due to be submitted and therefore the German supplier obviously won't be able to re-issue invoices without the VAT element showing in that timescale. I want to be clear on how to treat the invoices which show the 19% VAT through the books for the impending VAT return. If I post them to Sage with VAT code T8 as they are, the VAT amount will be shown at 20% which would obviously be incorrect. I'm at a loss.
The EU Refund Scheme should work for you. PN 723A explains this. It is of course much slower than using the proper route.
You will need to enter the full value of the invoices in question. Hopefully, if and when you receive your refund, you will credit against the cost of sales.
There are specialist firms that do such claims, but they do charge a fee, usually based on the VAT recovered. I have used these people before: www.thevatclearinghouse.com/VATRefunds.htm, and found them efficient.
