VAT problem with oversea suppliers

Posted by fionaG PM | on Wed, 17/03/2010 - 16:05 913 7 comments | report

Hi,

We're buying from oversea suppliers, and we're VAT registered. I'm using sage instant.

When I input the supplier invoice, what vat code should I use? I firstly think of using T1 which is the standard vat code, but then it turns out that the total amount that I need to pay to my supplier is the original price + vat. However, as they're oversea suppliers, they don't charge me vat, these 17.5% is the vat I need to pay to HMRC.

What should I do in this case?

Many thanks,

Fiona.

Comments

VAT PROBLEM

sally1964 | Wed, 17/03/2010 - 16:21 | Permalink

Hi, on sage instant you should use T8.

If you go to Settings, configuration and use the tax code tab you will see that T8 is needed. This will ensure that it is dealt with correctly for declaring to HMRC for EEC sales and purchases

Thanks for your reply

fionaG | Wed, 17/03/2010 - 16:35 | Permalink

I looked into T8 code in instant, it says T8 is for 'Standard rated purchases from suppliers in EC'. The supplier is actually in China, so they're not charging us any VAT. In my case, does it still apply? Where should I put the 17.5% vat that I need to pay to the HMRC when I get the goods from the custom?

sorry I'm quite new to this and maybe these questions seem too obvious...

VAT not involved as China is a none EU Country

puzzel | Thu, 18/03/2010 - 15:47 | Permalink

Hi Fiona,

As you mentioned in your second post, the goods are coming in from China and thus no VAT will be involved. In this case I would be inclined to use T2 (exempt transactions). The other option is to post the invoice as T1 and overwrite the VAT value with 0. Either of these would include the purchase value within the VAT return.

Prior to receiving the goods, you would in general be billed by a "clearing house", at this point you would pay a sum for the handler/shipping of the goods and you will also be presented a bill for Import Tax. Both of these will be paid before you get your goods.

Post each invoice from the clearing house (assuming you receive two). One as an import charge and standard VAT (T1). The second invoice is posted as import tax, with a net value, T1 code and this import tax in the VAT box value.

Usually about a week later you will receive a certificate from HMRC showing thie amounts of import tax (VAT) paid and this certificate is your authorization to reclaim the amount paid.

Regards

T0 or T2

fionaG | Thu, 25/03/2010 - 10:32 | Permalink

Many thanks for your reply. I'm not sure what\s the difference between T0 and T2? As I'm importing from China which is not a EU country, but these are VATable goods (I need to pay 17.5% import tax). In this way, it belongs to neither T0 (zero rated) or T2(exemption)....

VAT Problem

Phillip | Thu, 25/03/2010 - 10:49 | Permalink

Hi FionaG

When I come across this I usualy use T1 with '0' in the VAT field for the invoice from the supplier in China - that way you record the correct amount to pay over to your supplier.

When the shipping company provide their invoice for the VAT/Duty I also code this to T1 with the duty element going to the duty nominal code and overtyping the VAT calculation with the VAT to be paid - this will then record the correct amount to pay over to the shipping company.

As you can see now the Supplier invoice with NIL vat on T1 has matched with the Shipping companies VAT charge also on T1.

HTH.

Shipper cannot invoice for VAT

Peter Bonetti | Thu, 25/03/2010 - 11:17 | Permalink

Sorry, the shipper cannot provide an invoice for the VAT as it is levied by HMRC and the C79 is used to recover the VAT.

The shipper can only seek reimbursement of the sum equivalent to the VAT they have paid out on your behalf.

Thanks a lot Puzzel and Philips

fionaG | Thu, 25/03/2010 - 11:17 | Permalink

I think I'll go with the safer bet - T1 then overwrite the amount of vat to ZERO.....