Entries on VAT return for Import VAT invoices?

Entries on VAT return for Import VAT invoices?

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I wonder if anyone can help?

Just in the middle of completing a VAT return for company A that imports goods for Company B to sell on.  Company B pays for the goods and them sells them on, and then Company A will charge Company B a royalty/commission based on how much goods are sold.  Company A pays the import VAT and Duty for the goods.

So, I am completing the VAT return for company A, and I come across an invoice for £10,000 import VAT.  How do I enter this on sage?  I assume I claim back the £10k as input vat (I have matching C97 form), but because company A doesn't pay for the goods there is no entry for box 7 on the VAT return,  In effect I will be showing £10k input VAT in box 4, but there will not be any entry for Box 7.

When you go to submit figures on HMRC online for a VAT return, if Box 7 says zero but box 4 says claim of £10k, then it is coming to come up with the message that states that these figures are irregular etc etc.

Someone please help!

Thank you in advance

Replies (2)

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By Richard Willis
12th Oct 2011 18:14

Follow the goods, not the money!

If Co A has been charged import VAT they have presumably also been invoiced for the goods.  The fact that Co B pays the bill is irrelevant; Co A is the owner.  If they then transfer the goods to Co B there is a taxable supply from A to B which should be shown as an output in A and an input in B with VAT being charged.  When Co B pays the invoice they will Dr Co A and Co A will credit Co B in their respective inter/co accounts.  However B will still owe A for the VAT and duty.

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By Peter Bonetti
13th Oct 2011 08:44

Timing

Another aspect is that C79's are produced in the middle of a month and so you could quite easily pay for the goods in the last month of your quarter but not receive the C79 (and thus be eligible to claim the VAT) until the first month of the following quarter.

Mind you, whether the online system has taken that into account is another matter!!

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