Zero rated goods imported from EC supplier - how do i ensure no entry on box 2 on the vat return

Question asked by Christine Thomson 11 years ago

EC based Supplier provides their vat number and has not charged vat

Options are selected so that the item is marked as goods from EU supplier and vat rate is chosen as 0.

Presumably this is the standard procedure that works for standard rated imports in that the pre-populated vat return box 2 and 4 amounts contain 20% of the amount paid on the basis that the goods will be standard rated and therefore subject to acquisition tax.

How do i proceed with import of goods that are zero rated (books) - vat office advise appears to suggest that (7.4 notice 725) there should be no entry in box 2 (or matching entry in box 4) but using the standard settings i can't seem to achieve a no entry in box 2 results whilst ensuring there is an entry in box 9. Thanks

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5 Replies

Hi Christine

It looks like you are right, the system's treatment of EU acquisitions is determined by the appropriate VAT treatment and will always force 20% into boxes 2 & 4.

I will double check if there is anyway around this but, for the time being, if it is significant then I would mark them as zero rated UK purchases to get them into box 7 and then manually submit the return with Box 9 adjusted.

Although I'm sure it's a rarity in the CB Community we will look at how best to cope with this. One way may be to add an extra VAT rate "0% EU acquisitions".

Any other suggestions welcome.

Best answer
11 years ago

I could swear my list said 1 & 2 when I wrote it!!!!

11 years ago

As a side note, this is probably something CB need to look into...

11 years ago

My opinion for what it's worth:

  1. Mark the books as outside the scope so they don't appear on the VAT return but then file the return using HMRC's software instead of through Clear Books so you can make a manual entry in box 9.

or

  1. Mark the books as outside the scope so they don't appear on the VAT return and still file it through Clear Books.

Although technically wrong, i'd probably just go with option two. There's no loss of tax to anybody so the box filling is only really for statistical purposes anyway. I'm yet to see a VAT inspector who really cares if boxes 6-9 are 100% correct in all honesty so long as they haven't lost out. An example would be Clear Books throwing up an error message when trying to include client entertaining on the VAT return. I don't claim any VAT of course but I still include the amount spent within box 7. As far as i'm concerned whether exempt or zero rated the item still belongs on the return - I doubt HMRC would care though so long as no VAT itself is being claimed.

11 years ago

Hello Christine,

Thank you for you post and apologies for the length in time it has taken to get a response to you.

I have been looking into this and it is causing the incorrect treatment for the VAT treatments you are mentioning.

I have made a bill from an EU supplier using Books as a user created account code. The treatment used was Goods from EU supplier.

file

While this bill has the correct treatment and the correct allocations in the edit screen, the VAT return is inaccurate. It is including the Books of £60 as a Box 2 and 4 entry due to the reverse charges and box 7 and 9 for the value excluding VAT.

file

file

The box 9 should show the amount of £560 as it does but box 2 should only show £100 as VAT (£12 is from the books which should not be included). The main reason in which I see this happening is because the user code for Books was made by myself and was not a system made account code.

As this is a new situation for Clear Books and our VAT return, I will need to pass this onto an accountant who will be able to assist with this.

I will try to keep you updated as much as possible but it may take some time as it is a holiday period at the moment.

Vanish.

11 years ago

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