0% vat /exempt / no vat

Hi @Danzo1 

No VAT - will not post to VAT return, so only use for items that need to be kept off VAT100.

(I tend to use only on payroll cheques, adjusting journals, drawings, etc)

Z=0% & Exempt are pretty much identical in the effect they have on the VAT return.

(both post amounts to box 6/7 & £zero VAT)

The difference is technical & for most people not worth worrying about.

I tend to use Z=0% for everything bought/sold in the UK whether it is technically exempt or zero-rated but use Exempt code for overseas - just as a way of separating things on reports.

For your books, I'd use Z=0%.

Whether that's technically correct is neither here-nor-there.  For all practical purposes it works & gives the correct result - purchase posted to box 7 & £zero VAT to box 4.

Hope that helps.

Hi there! 

I use the codes as follows

1) No VAT -  where the company isn't registered for VAT so VAT isn't charged on anything even it it was a VATable item

2) Z=0% - Zero rated VAT items so items where there is no VAT charge applied such as children's clothes etc 

3) Exempt - we have grant projects where we cannot claim the VAT back from HMRC so even if VAT is charged on these items, I have to mark it as exempt. 

Hope this helps.  

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@Bernice Cole  wrote:

Hi there! 

 

1) No VAT -  where the company isn't registered for VAT so VAT isn't charged on anything even it it was a VATable item

Be careful with this - as above, NoVAT does not post at all to the VAT return (not even to box 6 & 7).

Even though, technically, something might be outside the scope of VAT it's better to be on the return than not.

Certainly, goods bought from non-registered suppliers should be shown on the VAT return.