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EC Acquisitions VAT & Direct Calculation Scheme

EC Acquisitions and notional VAT for Grocery Shop & Direct Calculation Scheme

Hello all

I have dealt with a client importing machinery that were all VATable sales in UK so applying the notional VAT treatment was easy. How you do it for groceries where most of the items are zero rated. Does the notional VAT of 20% is still applied to the acquisitions and claimed back. If yes then how do you calculate the VAT due using direct calculation scheme? https://www.gov.uk/vat-retail-schemes/direct-calculation-scheme

Any input. Thanks

 

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05th Dec 2018 19:06

Imported foodstuffs will only attract VAT if the C79 shows it.
Do you mean Acquisition Tax on intra-EU supplies? If so, then you calculate Acquisition VAT at the rate applicable for those goods in the UK.
Either way, you use the Expected Selling Prices of the minority rate goods, as per the link you provided.

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to leshoward
06th Dec 2018 09:57

leshoward wrote:

Imported foodstuffs will only attract VAT if the C79 shows it.
Do you mean Acquisition Tax on intra-EU supplies? If so, then you calculate Acquisition VAT at the rate applicable for those goods in the UK.

Good morning. @Les it is EU Acquisitions from Romania.

I have received the the previous VAT returns and it looks like the previous accountant have used 1% notional rate instead of 20%.

Am I missing something. All the manual I have seen sofar are saying 20% notional VAT to be added in
Box 2:VAT due in this period on acquisitions from other EC Member States for EC Acquisitions and same to
Box 4:VAT reclaimed in this period on purchases and other inputs (including acquisitions from the EC)

I know it doesn't make any difference to the business financial statements but why the HMRC has not flagged it if the figure in box 2 is not 20% of the
BOX 9 : Total value of all acquisitions of goods and related costs, excluding any VAT, from other EC Member State

thanks

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to nameistaken
06th Dec 2018 14:30

HMRC don't query it not being 20% because they're not expecting it to be 20%.

If I acquire £100 of adult socks and £200 of satsumas in a period (lots of stockings to fill) then I wouldn't be declaring £60 in box 2, I'd be declaring £20.

As the satusmas are zero rated in the UK but the socks are standard rated then although I declare both purchases in box 9 I only have VAT upon the standard rated items to declare in boxes 2 and 4. VAT due on £100 of socks = £20, VAT due on £200 of satsumas =£0.

So is it perhaps the case that the acquisitions are around 95% zero rated items and 5% standard rated, which would make box 2 1% of your box 9 figure?

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