I have a receipt to process from Costco from a client, for something called a 'Tower of Treats' and the VAT rate applied is K 12.40%. I have never seen this before, does anyone know what the VAT rate relates to. Many Thanks
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The only thing I can think of is that the bottom box is normally a panettone cake, so maybe some of it is zero rated!!!! Doesn't sound quite right to me, but the first thing that came to mind
This intrigued me so had a quick google and it would appear that other sites also charge at different VAT rates, so must have something to do with the treats inside the tower.
http://www.spicersofhythe.co.uk/pdf/product/Spicers-Of-Hythe-Mothers-Day...
If you have a an idle hour...
...see http://www.hmrc.gov.uk/manuals/vfoodmanual/vfood6200.htm
Includes (iced?) gems like: "It is our policy that there is a difference between flapjacks and cereal bars. "
Composite VAT rat
These occur quite regularly in a number of different situations but follow the same principle applied here.
Business expense?
It is not immediately obvious how a 'Tower of Treats' might be a legitimate business expense on which input VAT can be reclaimed. If it is a personal expense, do not process it. If it is business entertainment, you cannot claim input VAT, so process it gross.
No problem
Assuming you can actually reclaim any VAT on this (I take Euan's point) then I see no problem with simply entering correct net and VAT amounts in one line i.e. net £64.95, VAT £8.05 using standard VAT code (probably T1), you can overwrite the VAT amount manually. It makes no difference to the VAT return if entered all as one or is split between 20% and zero rated on separate lines
If using SAGE 2014 it may generate a warning about VAT percentage but as you know it's correct can be safely ignored.
It's a mixed supply
with part of it being zero rated and part of it being standard rated. I've purchased a mixed pack of biscuits from Costco (McVites and delicious they were) the VAT rate was averaged. Biscuits are zero rated but chocolate covered biscuits are standard rated.
I assume Costco have worked out the VAT element on the relevant portion of each and given an average to cover the VAT on the pack.