How to account for VAT on EU and non EU purchases

Am I supposed to add VAT on top, or account for it as though it’s already included?

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Help, I am trying to get to grips with how to account for VAT on foreign purchases.

Most of my Client’s purchase orders for non UK purchases show TAX as ‘£0.00’. Does this mean that for EU or non EU (Japan etc) purchases I am supposed to add 20% on top, or account for it as though it’s already included? Ie. My client pays for stock in Euros for the sterling equivalent of £100 – so, should VAT be £20 (100+20) or £16.67 (83.33+16.67)?

If the answer is the former (on top, 100+20), does my Client actually have to pay this? Or just account for it and inform HMRC? It's all so confusing!

My Client sells housewares.

Replies (8)

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By Wanderer
01st Feb 2017 18:45

£100 + £20

https://www.gov.uk/guidance/vat-imports-acquisitions-and-purchases-from-...

Note different treatment for EU & non EU purchases.

Thanks (1)
Replying to Wanderer:
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By Daybooks
01st Feb 2017 20:40

What is the difference between EU and non EU? That's one thing I cannot seem to figure out no matter how hard I try!

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Replying to Daybooks:
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By DMGbus
01st Feb 2017 20:56

Purchases from other EU states should be free of import duty and VAT (but buyer accounts for VAT in box 2 of VAT return and additionally box 4 if recoverable).

Purchases from outside EU in most cases carry import duty at rates dictated by the EU plus VAT at the appropriate rate. Unless a deferment arrangement is in place the duty and VAT have to be paid to HMRC before goods are released to the buyer.

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Replying to DMGbus:
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By Daybooks
01st Feb 2017 21:04

OK, so with a purchase from the EU I add VAT to what the client paid but don't actually pay it at the time, just account for it 'as though' it has been paid? And deal with it at the point of VAT return?

And with a non EU sale, I just mark it as zero rated and don't worry about detailing any VAT amounts - apart from my client has to pay to customs? Thanks SO much for your help

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Replying to Daybooks:
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By DMGbus
01st Feb 2017 21:15

EU purchases - no VAT paid at point of order and delivery - VAT accounted for at point VAT return is prepared.

Non EU purchases - again pay the supplier the price ex VAT (and ex duty). This time pay duty and VAT to HMRC. Duty is a non recoverable cost (it increases the cost of the goods). The VAT can be reclaimed provided that form C79 evidence is available (supplied by HMRC after VAT paid) and the purchase qualifies for input tax recovery.

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Replying to DMGbus:
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By Daybooks
02nd Feb 2017 21:41

I only just noticed this response. Thank you so much

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By sarah888bell
19th Jun 2019 09:21

I process expenses and purchases from the EU for my client. Sometimes my client has passed on our VAT number and the purchase is O rated however sometimes I am passed receipts for hotels and other purchases from the EU that have VAT on them.
In both cases could you confirm the correct filing procedure?

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Replying to sarah888bell:
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By Wanderer
19th Jun 2019 09:29

sarah888bell wrote:

I process expenses and purchases from the EU for my client. Sometimes my client has passed on our VAT number and the purchase is O rated however sometimes I am passed receipts for hotels and other purchases from the EU that have VAT on them.
In both cases could you confirm the correct filing procedure?

Why would your client give their supplier your VAT number?
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