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VAT Notice 700/64:4 reclaiming input tax on leases - How do I input this on clearbooks?

Question asked by Laura Harrington 3 years ago

Hi there, wondering if someone can help...

We recently took out a company car lease agreement of which the majority is business use but also some personal, I believe I am correcting thinking I can reclaim only 50% of the VAT on the rental element and 100% of the VAT on repairs and maintenance (service rental amount)

How can I input this on Clearbooks so that only 50% of the VAT is on the VAT return? I have had a go at entering as a journal as think this is the best way? but unsure if I have done it correctly?

Also, how do I then deal with the amount when I rec the bank?

Any help would be hugely appreciated!

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5 Replies

Hi Laura

You can actually just do it in one bill with the total sum being taken each month as the gross and the exact VAT you want to claim using 'manual' the net rental then reflects the actual cost to you.

Hi Laura

I'm a bit confused by the journal as nothing is going to the leasing cost account. I'm also not a great fan of using journals in bank or trade creditor/debtor accounts.

There are two more standard methods:

Create a recurring bill for the monthly cost using the manual VAT rate to set the VAT sum you want. You can also set the bank payment to pay this off within the recurring bill screen, or leave it as an unpaid bill and set the payment against it when explaining the bank statement.

Create a bank import rule to partly explain the bank payment itself each month. Again set the VAT rate to manual but you will have to enter the VAT manually each month when explaining the bank statement.

Hi Paul,

Thank you for your assistance, I had spoken to the helpdesk and a journal was suggested but this is certainly a much simpler way to do it!

Many thanks Laura

Hi Paul,

Sorry but I have just had a thought, if I use manual vat rate to set the vat amount I want, i.e. 50% (so that only this amount is reclaimed on the vat return as per the above vat notice) then when I come to reconcile the bank, the amount taken via direct debit will obviously be more than the bill.

How can I enter this onto clearbooks as 100% of the invoice value so that I can reconcile properly but only reclaim 50% of the vat on the lease rental amount.

Does that make sense?

Thanks Laura

I think I have solved it - created one bill with the total net rental and a manual vat rate of 50% and then another bill with the other 50% as 'No VAT 0%'

Hi Laura

You can actually just do it in one bill with the total sum being taken each month as the gross and the exact VAT you want to claim using 'manual' the net rental then reflects the actual cost to you.

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