Hi there,
I am trying to prepare my accounts to file a VAT return.
I am importing items from China to UK and have to pay VAT on entry to UK.
The import of items can be broken down into two transactions:
- 1) Payment of supplier for items (No VAT is paid in this transaction)
- 2) VAT paid at import of items to UK
At the moment I am categorising transaction 1 as No VAT and transaction 2 as 100% VAT. The problem with this method is that transaction 1 then doesn't show up in Box 7 "Net value of purchases".
What is the correct method to account for VAT in this case?
