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Rest of the world sales and Xero Tax Code

Rest of the world sales and Xero Tax Code

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Hello,

A client is working on a yacht in Finland (parts and labour) and invoicing a company based in Guernsey for this. They have a VAT specialist who looks at each project and has determined this to be 'Outside the Scope' (glad i'm not responsible for this!).

I understand that these should be included in box 6 of the VAT Return.

What is the correct VAT Category in Xero for these? 'Zero Rated Income' results in the correct figures but these are not zero rate transactions and 'No VAT' excludes this from box 6.

Thanks in advance.

 

 

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14th Aug 2019 12:58

Personally if they are outside the scope of VAT I wouldn't put them in box 6.

What does the VAT specialist say?

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to Cloudcounter
14th Aug 2019 13:25

Cloudcounter wrote:

Personally if they are outside the scope of VAT I wouldn't put them in box 6.

That's not what section 3.7 says here:-
https://www.gov.uk/guidance/how-to-fill-in-and-submit-your-vat-return-va...
Some examples are:
supplies which are outside the scope of UK VAT as described in Place of supply of services (VAT Notice 741A)
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to Wanderer
14th Aug 2019 14:03

I've been doing it wrong for 46 years then!

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to Cloudcounter
14th Aug 2019 14:35

They should go in box 6.

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14th Aug 2019 16:19

This has been debated on a number of occasions. Technically all sales should be reported, but this can lead to issues where a business has a large export turnover but only a small amount of UK sales. In which case it might legitimately be able to use the cash basis, or one of the schemes, or not need to register for VAT at all, as it is "VAT taxable turnover" that determines this. And VAT taxable turnover specifically excludes VAT-exempt sales, and goods or services you supply outside of the UK.

In practice HMRC seem happy to have (non-EU) exports excluded from Box 6 which means that the Xero "No VAT" code is the one to use.

But if you want to report them and show them separately on the VAT audit trail just set up a new tax code in Xero that links to box 6.

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