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How do I categorise Import Duty and Import VAT expense?

I have an expense regarding the import duty and import VAT that we paid when importing stock to the UK from China. The total invoice cost was £11,329.56 (see attached image) and this is showing as an expense in QuickBooks that I need to categorise. It is comprised of £1,303.47 for Import Duty paid and £10,026.09 for Import VAT paid. 

How do I categorise this expense? I can split the expense amount in to each type but the maximum VAT I can select is 20% whereas the Import VAT expense is all VAT. No option available categorises the expense as fully VAT expense for me which I need for my tax return. (see second attached image)

9 Comments
Established Member

Hi kritsana2712, Thank you for your query! Recording a...

Hi kritsana2712,


Thank you for your query!

Recording a 100% VAT expense can be a bit tricky in QuickBooks, but don't worry, we have a a step-by-step guide on how to record it.

Please follow these steps:

1, Click on the + sign and choose Expense

2, Either choose a payee or leave that box empty

3, On the first line of the expense choose any of your Expense accounts

4, For the amount enter a pound (1) and choose 20% S as your VAT code

5, On the second line choose the same expense account

6, For the amount, enter minus a pound (-1) and choose No VAT as a VAT code

7, The total of the expense will show as 0

8, Under the Subtotal box the VAT box become editable

9, Enter the desired VAT amount into the VAT box and save the expense

10, This will create a 100% VAT transaction


This transaction will show in Box 4 on your VAT returns.


Let me know if you have any queries. Or, if you'd like to go through this over the phone, you can call our dedicated team who will be happy to assist you. Our contact details can be found here along with our opening hours

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Hi, That's a helpful guide for dealing with the VAT aspec...

Hi, That's a helpful guide for dealing with the VAT aspect of the import cost, but how is the duty dealt with in this situation? Thanks
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my thoughts exactly

my thoughts exactly
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If I have a 12.8% Duty rate that is invoiced at 100%, the...

If I have a 12.8% Duty rate that is invoiced at 100%, then the same does not apply as mentioned above imo. It should be zero rated as such, because Duty is already a part of the VAT calculation, therefore a cost, but also not a claimable tax, hence the Z rate. ...or???
Not applicable

I just sorted out my issue- I followed the instructions a...

I just sorted out my issue- I followed the instructions above but was unsure of what to do about the duty- you just add another entry (in the accounts section were you have just added £1 @ 20%, and -£1 @ zero tax) for the amount of duty, and add a note in the description 'Duty'. The box containing the tax is now editable so you manually input the amount of tax. Apparently the description of the tax (20% in this case) is not important- just the amount that's in the box. Hope this helps
Established Member

Re: Hi kritsana2712, Thank you for your query! Recording a...

Thank you. It worked but it is showing as the outstanding amount in creditors. How would this be deal?

 

QuickBooks Team

Re: Hi kritsana2712, Thank you for your query! Recording a...

Hello NK001,

 

Welcome to the Community.

 

Could you please send us some further details of the transaction or perhaps include some screenshots.

 

Thanks,

 

 

Active Member

Re: Hi kritsana2712, Thank you for your query! Recording a...

For instance I entered £1 inc. VAT for cost of sales and -£1 no vat for the same account. In cost of sales account QuickBooks will deduct £1 and add 0.80p. This mean that there is affected balance on account of 0.20p which will impact profit/loss and as a result corporation tax will eventually increase for no reason. Are you sure it is a correct method?

QuickBooks Team

Re: Hi kritsana2712, Thank you for your query! Recording a...

Hey Irinka, Please can you post some screenshots of this happening on your books so i can accurately replicate it and advise?