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Dogboy
Level 1

Accounting for Customs VAT Charge

Hello,

I recently purchased an item from Germany (April 22), of which no VAT was charged.

However, when the item arrived in th UK, customs have now charged me VAT and issued me with an invoice for the VAT amount.via ParcelForce.

The original invoice from Germany was in my last VAT quarter and the ParcelForce invoice (For the VAT) is in my current VAT quarter.

 

How do I account for these invoices, especially for the VAT invoice in QuickBooks? As the parcel force invoice is effectively 100% VAT  as it purely the VAT charge on the German order. I am just unsure how to process the VAT invoice in QuickBooks.

Thanks

Paul

Solved
Best answer May 24, 2022

Accepted Solutions
paul72
Level 8

Accounting for Customs VAT Charge

Hi @Dogboy 

 

There are lots of posts on here (import VAT/Duty or 100% VAT or entering HMRC C79s).

 

There are two basic ways to create a 100% VAT balance for Importing purposes.

My preference (I think it's more transparent than QB's suggested method)...

Split the transaction on to two lines:

   Line 1: £100 with VAT Code S=20% gives VAT of £20

   Line 2: minus £100 with VAT Code Z=0% or Exempt gives VAT of £0

   Transaction Balance is £20 (£nil to Expenses but £20 of VAT).

(also, bear in mind that you will have already entered a bill from your supplier for £100 with £nil VAT - so, on balance, you now have £100 plus £20 of VAT in your accounts)

 

If there are any fees/disbursements/duty they can all go on individual lines with their own VAT entries if necessary.

 

Hope this helps.

View solution in original post

1 REPLY 1
paul72
Level 8

Accounting for Customs VAT Charge

Hi @Dogboy 

 

There are lots of posts on here (import VAT/Duty or 100% VAT or entering HMRC C79s).

 

There are two basic ways to create a 100% VAT balance for Importing purposes.

My preference (I think it's more transparent than QB's suggested method)...

Split the transaction on to two lines:

   Line 1: £100 with VAT Code S=20% gives VAT of £20

   Line 2: minus £100 with VAT Code Z=0% or Exempt gives VAT of £0

   Transaction Balance is £20 (£nil to Expenses but £20 of VAT).

(also, bear in mind that you will have already entered a bill from your supplier for £100 with £nil VAT - so, on balance, you now have £100 plus £20 of VAT in your accounts)

 

If there are any fees/disbursements/duty they can all go on individual lines with their own VAT entries if necessary.

 

Hope this helps.

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