Completing the VAT registration form

mfsb

JasonLVC wrote: »

There are two transactions here. Customer buys goods from you (stage 1) and then you place order with supplier to supply those goods (stage 2).

Stage 1 involves you charging UK VAT in sterling for whatever the agreed price was plus 15% VAT to your UK customer. As a UK sale, this will go on your VAT return in Box 1 (outputs) and Box 6 (sales exlcuding VAT).

Stage 2 involves you buying goods from Italy in Euros for whatever the agreed price was. The Italian supplier will not charge you VAT as you are UK VAT registered. You have to reverse charge the purchase in your VAt return as follows :-

1. Conversion from euros to pounds is simply a case of taking the spot rate of the day (use something like www.xe/ucc to get the day exchange rate) or it may already be shown on the invoice. Use that conversion ratio to convert euros into pounds (and make a note of the rate on the invoice). For example, an invoice of 313 euros at todays rate of 1.11 = 313euros/1.11 = £281.98 you then add VAT to that so £281.98 * 15% = £42.29 which you pay over and reclaim at the same time on the VAT return = neutral outcome.

Whatever the sterling outcome is, calculate VAT at 15% and put this figure in Box 2 (VAT due from EU), in effect a sale. Make sure the same value is also reclaimed in Box 4 as input tax.

2. For Box 9, you enter the total value of goods and services related to those goods (such as delivery charges) that you received from Italy. Again, you;ve already converted the invoice into Sterling so use Sterlking values, not Euros.

Remember to also include this same amount in your Box 7 total. The Box 7 figure is for your purchases (excluding VAT) for the period including the purchases on which you paid the VAT you put in Box 4, anything you bought that the reverse charge procedure applies to and any amount you put in Box 9.

It is a bit complex but once you get the hang of it it'll be much easier each time thereafter.

Many thanks really appreciated thank you this helps me -all the best:beer: