EU VAT

Many thanks Paul and Theolonious,

Very clear and detailed explanation to both the HRMC and the best way to input the results in Clearbooks.

Have a great day.

Joseph

Correction the refund IS 0% VAT not outside the scope

Sorry if I've got the wrong end of the stick here but if it involves expenses incurred overseas how does that involve the EC Sales list?

Ordinarily, if you buy in services from the EU and supply your VAT number, no EU VAT is charged and, picking the correct treatment and 0% VAT, CB will create the necessary entries in your VAT return, effectively entering a notional 20% UK VAT to both boxes 1 & 4. This is the reverse charge process.

Similarly, if you buy in goods from the EU and supply your VAT number, no VAT is charged and, again, using the appropriate treatment and 0% VAT, CB will enter 20% VAT in boxes 2 & 4 (if you are standard rather than Flat rate VAT).

If you go abroad and spend money buying the goods and services you will be charged the local VAT but this has no impact on your VAT return you treat the total cost as a UK purchase with 0% VAT to get the cost into box 7. If you want the EU VAT back you have to apply to the country's VAT authorities.

As I say, I may have mis understood the question, but I'm still confused by the ECSL reference.

Hi Joseph,

Generally, we would suggest using 0% for the VAT rate.

That is a great idea. I will raise this with our development team to be reviewed. Any further advancements will be announced on our community news board.

Dear Paul,

That is exactly correct I was referring to expenses and not sales. Regarding sales, I was clear on how to proceed but regarding expenses, I was not certain if the correct procedure was for a 0 VAT or exclude. As you have very well written

"If you go abroad and spend money buying the goods and services you will be charged the local VAT but this has no impact on your VAT return you treat the total cost as a UK purchase with 0% VAT to get the cost into box 7. If you want the EU VAT back you have to apply to the country's VAT authorities."

However, in the case, you were to claim these back because they become a large amount (ongoing large expense by the commercial team etc.) would how they have been accounted for in Clearbooks and presented to HRMC matter? Or does each country only care about seeing the physical invoice and not how it has been accounted for in Clearbooks be it 0 or to exclude?

Hi Paul,

Thanks for your correction in terminology.

Hi Theolonious,

Yes, that is the way we proceed and we generate the EC sales list and reverse charge. However, once this is selected you still have to choose the VAT rate as either 0 or exclude and wanted to know which of the two is the correct field to enter in this case?

Would be good if once you select the option as Goods or Service from EU the VAT rate field was also correctly selected. Could even go further and have the system check against the EU VIES the VAT number entered from the corresponding country to confirm if it is correct.

Hi Joseph,

These transactions should be included on your EC Sales list and submitted alongside your VAT return.

This feature is required to be toggled on in ClearBooks. Head to Settings > Configure system > Toggle Features > VAT & Bank import tool, then enable the "Reverse charge & EC rates" option.

This is will add an additional field when creating bills/invoices for VAT treatment. This additional field will allow you to determine the origin of the good or service i.e. Good/Service to/from a UK Customer/Supplier, Good/Service to/from an EU Customer/Supplier etc. The linked guide outlines this is further detail - https://clearbooks.freshdesk.com/support/solutions/articles/33000203284-how-to-generate-an-ec-sales-list

I have also included a link to Gov.uk as reference material to the process above - https://www.gov.uk/guidance/vat-how-to-report-your-eu-sales

If this raises further questions do let me know?