Hi Lee
Not enough information here. A few questions that spring to mind - is your client VAT registered? What VAT scheme? Is the supplier VAt registered? Have they quoted your VAT number on the invoice? Or included VAT? What is the invoice actually for? Goods or services? What kind of services - electronic/other? Which country in the EU? Might think of some more but thats for starters.
(BTW - just cos they are based in the eurozone doesnt necessarily mean they will invoice in euros)
__________________
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 Joanne, Thanks once again and sorry about all the questions.
The invoice is definitely in euros received it late last night. The company are based in Holland and from my limited understanding there is no Tax (VAT) on the invoice, I think this invoice will end up in my box 2 eu acquisitions on the vat return. But the goods that I am buying will be standard rated when they are sold this end in this country and will pay the VAT accordingly.
The company I work for are VAT registered, not sure if this is right but I think "standard vat scheme" literally everything that is sold is standard 20% vat" and usually everything that is purchased is from the uk and standard vat also.
Edited: ok scrap anytanything I said lol. So apparently I am to work out 20% of invoice and place that in box 2 and then put the same amount in box 4 effectively nilling it out for the vat return. I guess I just have to work out how to input and setup this account on VT as its a new supplier I be able to create it as an eu supplier with relevant settings?
-- Edited by Muzzy2kuk on Tuesday 7th of March 2017 05:56:14 AM
-- Edited by Muzzy2kuk on Tuesday 7th of March 2017 07:00:11 AM
Hi Lee
Thank you for the partial update. I did think of another question last night - was just about whether or not the goods followed the invoicing route (ie goods and invoice both from Holland) - but will assume it is. But that said - the first thing you need to do is actually check the invoice. Does it have VAT on it? This is important. If it does then you cannot reclaim but must go back to the supplier, get a credit note for it and ask them to re-invoice it to you with nil VAT on it.
If it has your VAT number on it and is NOT showing any VAT on the invoice then you need to include it in four boxes on the VAT return - Box 2 as you said initially as VAT on the acquisition, also as your edit now shows also in box 4 for the reclaim. Also box 7 - to include in total purchases and box 9 - EU purchases.
NB - the VAT rate will follow the VAT rate on the items in the UK eg if standard rate, then 20%, if reduced rated item - then 5%.
NB 2 - Dont assume all scenarios that are similar (as in imported from EU) will be exactly the same. There are special rules for some movements of goods so different rules will apply in different situations. Also - is dependent on the VAT scheme - you clearly are not on the flat rate scheme nor I would assume due to the industry you are in on the VAT cash accounting scheme, so it sounds like the standard scheme. (scheme being different to rates).
Given this is the first one you have seen, Im also assuming the ££value is relatively low, but if this is due to increase substantially (eg if its a new permament source of goods) then you may need to consider reporting this via Intratstat. This is just a method of ecollecting stats for HMRC on the movement of goods in the EU but you would need to be doing £1.5m in goods arriving (£0.25m going out) to do so and HMRC will generally write to you if thats required.
Some software copes with it all easily enough - I use Sage for such things and its straight forward. Never used VT for such but there is some help in the guide - page 47, point 6.11 (although in the example it gives an old VAT rate. What I woudl do if I were you is do a back up, before keying this invoice. Then run a VAt return and print/take a screen shot, but do not process it (restore back if you need to). Then key the one invoice - re-run the VAT return and see that the invoice appears in all four boxes. Best way to learn and see it all.
So I got the invoice and it shows a net amount for e.g 2000 euros, 0 vat or tax, then total of 2000 euros. This invoice is for goods that will be sold on by my company and all goods will be sold with a 20% vat rate attached.
I set up a new supplier in VT+ and within the settings made it a supplier from the eu. When entering the invoice onto the system it had an extra box there was amount, vat, eu vat and total.
I put the 2000 euros in the amount column and 0 in both the vat and eu vat columns leaving 2000 euros in the 4th autofill total column.
I then generated a vat return to see how this affected the figures. I was expecting figures in box 2 a difference in box 4, figures in box 9 and to affect box 7. However box 2 was still empty and box 4 unaffected. There was the amount in box 9 as expected and I presume (but didnt check) in box 7.
I then went back to the invoice and added the eu vat, this however added onto the net amount making the invoice amount incorrect.
I am unsure how to get the acquisition tax to show in box 2 and 4 and still keep the figures correct on the purchase invoice entry.
P.s I converted from euros to sterling using hmrc's exchange rate for march 2017.
Good - at leats the invoice is correct. Half the battle won!
You need to include the VAT at 20% VAT rate in both input and EC VAT payable boxes from what Ive seen in the guide (sorry I havent actually tried it out in VT as I use a multi currency Sage software for such things as it has a stocking facility as well).
If it wont work, so that the item appears in all four boxes on your VAT return, then do a system restore and start again, but ensuring you put the information in at the time of keying the invoice.
Always do lots of backups and always always before you try something new like this. So much easier to unravel if needs be!
__________________
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
Just a quick update incase anyone is interested for future reference. If you set up an eu supplier, then when entering the invoice put the net amount workout the vat and enter that vat figure into both input vat and eu vat they effectively cancel each other out. Leaving the total correct. Thanks
