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Common VAT codes

When you set up VAT, QuickBooks Online automatically sets up a list of common VAT codes for you.

If you are on the Flat Rate Scheme, you will find that some of the codes will not post in the same way. For more information on where these codes post, see Flat Rate Scheme: How does it work?

If you are registered for VAT, you have to charge VAT at the standard rate on all goods and services you supply, unless they fall into another category.

Before using anything other than the standard rate, go to HMRC's website to find out what rate of VAT applies in any particular set of circumstances.

How does this report on my VAT 100 return?

 Code used on sales form Code used on purchase form
 VAT at 20% to Box 1
Net Sale to Box 6
VAT at 20% to Box 4
Net Purchase to Box 7

A reduced rate of VAT applies to some goods and services - including items such as domestic heating fuel and children's car seats. Sometimes the reduced rate only applies in certain circumstances, or it may depend on who the customer is.

It's important to read the detailed rules on HMRC's website to understand when the reduced rate can be used.

How does this report on my VAT 100 return?

 Code used on sales form Code used on purchase form
 VAT at 5% to Box 1
Net Sale to Box 6
VAT at 5% to Box 4
Net Purchase to Box 7

Some goods and services are zero-rated. This means they are taxable for VAT, but the VAT rate is zero percent. Sometimes the reduced rate only applies in certain circumstances, or it may depend on who the customer is.

Read the detailed rules on HMRC's website to understand when the zero rate can be used.

How does this report on my VAT 100 return?

 Code used on sales form Code used on purchase form
 VAT at 0% to Box 1
Net Sale to Box 6
VAT at 0% to Box 4
Net Purchase to Box 7

Some goods and services are exempt from VAT. These include:

  1. Insurance (but there is an Insurance Premium Tax (IPT) that may apply instead).
  2. Some services from doctors and dentists.
  3. Some types of education and training.

Special rules apply for businesses that are exempt or partly exempt. Please go to HMRC's website for further details.

How does this report on my VAT 100 return?

 Code used on sales form Code used on purchase form
 No VAT
Net Sale to Box 6
No VAT
Net Purchase to Box 7

Default reverse charge VAT code for services.

How does this report on my VAT 100 return?

 Code used on sales form Code used on purchase form
 Not applicable +/- VAT at 20% to Box 1 and 4
+/- Net Purchase to Box 6 and 7

Reverse charge for the purchase of computer chips and mobile phones.

How does this report on my VAT 100 return?

 Code used on sales form Code used on purchase form
 Not applicable +/- VAT at 20% to Box 1 and 4
Net Purchase to Box 7

Some goods and services are outside the scope of VAT and are not reported on the VAT return. This includes anything you:

  1. Sell (or otherwise supply) when you're not registered for VAT – and you don't need to be registered.
  2. Buy or sell outside the European Union (EU).
  3. Sell (or otherwise supply) but not as part of your business – for example, if you occasionally receive income from sources such as leisure activities or hobbies.
  4. Buy and sell for your own personal use, such as a hobby.

Other goods and services outside the scope of VAT include:

  1. Donations to charity freely given by a business where the giver does not receive anything in return.
  2. Statutory fees and services – for example, MOT testing, congestion charge.
  3. Tolls for bridges, tunnels, and roads operated by public authorities.
  4. Low-cost welfare services provided by charities.

How does this report on my VAT 100 return?

 Code used on sales form Code used on purchase form
 Not applicable Not applicable

From 1 January 2021, if your business is registered for VAT in the UK, you'll be able to account for import VAT on your VAT return for good you import to:

  • Great Britain (England, Scotland and Wales) from anywhere outside of the UK
  • Northern Ireland from outside of the UK and EU

There will be no changes to the treatment of VAT or how you account for it for the movement of goods between Northern Ireland and the EU. However, due to postponed VAT accounting, there will be changes to the way you complete the boxes on your VAT return.

Postponed VAT Accounting Zero-rated as of 1 January 2021.

How does this report on my VAT 100 return?

 Code used on sales form Code used on purchase form
 Not applicable Box 1 - Include VAT due in this period on imports accounted for through postponed VAT accounting.

Box 4 - Included VAT reclaimed in this period on imports accounted for through postponed VAT accounting.

Box 7 - Include total value of all imports of goods included in your online monthly statement, excluding VAT.

Postponed VAT Accounting as of 1 January 2021.

How does this report on my VAT 100 return?

 Code used on sales form Code used on purchase form
 Not applicable Box 1 - Include VAT due in this period on imports accounted for through postponed VAT accounting.

Box 4 - Included VAT reclaimed in this period on imports accounted for through postponed VAT accounting.

Box 7 - Include total value of all imports of goods included in your online monthly statement, excluding VAT.

As a business that is registered for VAT, if you purchase goods from another business that is registered for VAT in an EC Member State, you should not be charged VAT if you give the supplier your VAT registration number. The supplier will then charge you under the reverse charge mechanism and you can then account for the VAT at the rate applicable in your country.

If you ship goods to a customer in an EC Member State, you should not charge VAT if your customer supplied a valid VAT registration number. You can check the VAT number at the European Commission website.

You then charge your customer under the reverse charge mechanism. The invoice must include the words "reverse charge". Some examples from HMRC that fulfil the legal requirement are:

  1. Reverse charge: VAT Act 1994 Section 55A applies
  2. Reverse charge: S55A VATA 94 applies
  3. Reverse charge: Customer to pay the VAT to HMRC

If you do not receive a valid VAT number, you must apply the applicable VAT rate. For example, VAT charged at 20% is VAT code 20% S.

For qualifying transactions, use one of the following EC VAT codes:

Used for Intra EU B2B (business to business) purchase (acquisition) of goods after 4th January 2011.

In B2B transactions, it is the customer who must account for any VAT due via the reverse charge mechanism (for example, the customer must act as if they are both the supplier and the recipient of the goods).

How does this report on my VAT 100 return?

Code used on sales form Code used on purchase form
 Not applicable +/- VAT at 20% to Box 2 and 4
+/- Net Purchase to Box 7 and 9

Used for Intra EU B2B (business to business) sale (supply) of goods. If the EU customer is not VAT-registered, then the applicable UK rate of VAT is charged.

How does this report on my VAT 100 return?

Code used on sales form Code used on purchase form
 Net Sale to Box 6 and 8 +/- VAT at 0% to Box 2 and 4
+/- Purchase to Box 7 and 9

Used for Intra EU B2B (business to business) purchase of services after 4 January 2011. In B2B transactions, it is the customer who must account for any VAT due via the reverse charge mechanism (for example, the customer must act as if they are both the supplier and the recipient of the services).

How does this report on my VAT 100 return?

Code used on sales form Code used on purchase form
 Not applicable +/- VAT at 20% to Box 1 and 4
+/- Net Purchase to Box 6 and 7

Used for Intra EU B2B (business to business) sale of services. If the EU customer is not VAT-registered, then the applicable UK rate of VAT is charged.

It is important to note that the Place of Supply on services changed from January 2010 as follows:

  1. For B2B (business to business), the place of supply is where the customer (receiver of services) is based.
  2. For B2C (business to consumer) the place of supply is where the business (provider of services) is based.

How does this report on my VAT 100 return?

 Code used on sales form Code used on purchase form
 Net Sale to Box 6 +/- VAT at 0% to Box 1 and 4
+/- Purchase to Box 6 and 7

Used for Intra EU B2B (business to business) transactions on computer chips and mobile phones. (Notice 735 refers).

How does this report on my VAT 100 return?

Code used on sales form Code used on purchase form
 Net Sale to Box 6 Not applicable

If you can't see these codes, they may be inactive. To active codes in QuickBooks, simply got to:

  1. Go to the Taxes page in QuickBooks, select Edit VAT and then Edit Rates.
  2. Select the gear icon above VAT rates and select Include inactive.
  3. Use the toggle feature against the VAT code you want to activate/deactivate.

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