MTD return including non-GB transactions

Problem reported by Gemma Martin 5 years ago

I've sent my VAT return in using the MTD setup but am getting a lot of queries back from HMRC that I cannot explain.

  1. Sales made outside GB are being included in the GB return despite being flagged as non-GB (eg. VAT treatment loaded as 'goods to EU customer')
  2. Purchases from suppliers outside the UK are being shown with a VAT value at 20% despite not being invoiced as such. (these have been loaded as 'outside EU' and as zero VAT)

How are the calculations being run for the MTD GB VAT return?

Thanks

Solved
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7 Replies

Hi Gemma,

I wouldn't be able to tell you in your case as I cannot access your account. But the correct way to account for these on Clear Books is via the reverse charge rule. Which you can apply in Clear Books. Have you applied this in your account?

All the best,

Mohamed

5 years ago

Thanks for your response Mohamed. I have 'Reverse charge and EC rates' toggled on but do not have 'Domestic reverse charge'. Is this the one you refer to?

My concern in the first point is that sales made to countries outside of GB (where I am paying VAT to different countries such as Germany, Spain, Ireland etc) are still appearing on the GB VAT return as due. However, I will not be paying this across to HMRC as this will be paid to foreign EU authorities. If I toggle on 'domestic reverse charge' will this remove the VAT element from goods and services purchased from outside of EU?

Many Thanks Gemma

5 years ago

Hi Gemma,

It is not the domestic Reverse charge. If you are using the reverse charge then you should have the VAT recorded on the return in both the sales and purchases so that the two cancel each other out.

All the best,

Mohamed.

5 years ago

Thanks Mohamed, this isn't what's happening. I just have VAT recorded on the return for sales. I think I may need to somehow manually exclude anything that isn't GB or post something to eliminate these entries but there are around 250,000 lines on my return so I'm not sure I fancy that.

Regarding the US invoices, they are being treated as goods supplied from outside the EU and so 20% is being calculated. However, this is for services provided by US companies but they are also providing the services outside of the EU (freight services in the US). How should I be recording these purchase for VAT not to be automatically calculated? I have vat treatment 'services from suppliers outside of EU' and vat rate as 'zero'. Would it be better to class these as 'Out of Scope'?

Thanks

5 years ago

Hi Gemma,

I'm afraid I wouldn't be able to advise on this and I would advise speaking to an accountant to be sure of the correct way to record this.

All the best,

Mohamed.

5 years ago

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