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Level 1

How do I record vat margin scheme on quickbooks online

I have manually calculated the adjustment for VAT margin scheme but don't know how to show it on Quickbooks

Solved
Best answer 02-07-2019

Accepted Solutions
Anonymous
Not applicable

How do I record vat margin scheme on quickbooks online

Hello Nicky,

The VAT margin scheme is not supported within QBO. An accountant may be able to provide journal entries which would allow you to record these adjustments.

IntuitJay

View solution in original post

4 REPLIES 4
Anonymous
Not applicable

How do I record vat margin scheme on quickbooks online

Hello Nicky,

The VAT margin scheme is not supported within QBO. An accountant may be able to provide journal entries which would allow you to record these adjustments.

IntuitJay

View solution in original post

Highlighted
Level 2

How do I record vat margin scheme on quickbooks online

Handling the quickbooks entries can be done on the invoice with two lines instead of one. The first line is the purchase price, the second is the margin price (sale price - purchase price). You choose Exempt VAT* for the purchase price and standard (20%) VAT for the margin price. (Be sure to check "inclusive of VAT" on the invoice settings.)

 

example:
line 1: purchase price £2,500
line 2: margin price £500
Subtotal : Sale price £3,000
VAT £83.33
Total: £3,000

 

This does have problems however. Displaying the purchase and margin separately is not something any dealer will want to show on invoices to their customers but thankfully there is a work around. Create a Bundle called "Second Hand Car Sales" for example and place the purchase product and margin price product in the bundle. Do not show individual products in the bundle and then you will only see the total of the bundle on the invoice in line 1.

 

example:
line 1: bundle price £3,000
subline 1: purchase price £2,500 (hidden on invoice)
subline 2: margin price £500 (hidden on invoice)
Subtotal : Sale price £3,000
VAT £83.33
Total: £3,000

 

One thing to note is that using this method does hinder the use of the stock control feature of Quickbooks plus. If you tracked each individual item as its own unique product you would have to create bundles every time you sell an item, something I wouldn't recommend if you sell a lot of items. Personally I would use an external spreadsheet to manage your stock and calculate the margin.

 

This method eliminates the need for VAT margin journal adjustments.

Highlighted
Level 1

How do I record vat margin scheme on quickbooks online

I have one question however, how does this work with the requirement found on HMRC website

https://www.gov.uk/guidance/the-margin-and-global-accounting-scheme-vat-notice-718#para5-3

 

Stating:

Total price – you must not show VAT separately

Can you avoid showing VAT on the invoice this way? 

 

Highlighted
Level 2

How do I record vat margin scheme on quickbooks online

While quickbooks can turn off VAT from the sales line. there is currently no way to hide the Total VAT within quickbooks. What I would recommend is to import a custom form style. 

 

Instructions:

click on Cog > Custom Form Styles.

click on New Style > Import Style

Download instructions and samples.

extract files to your computer and open one of the sample templates in word.

remove all references to VAT from the template and save

Upload the new DOCX file into quickbooks.

Check the fields, Preview and save once you are happy.

 

Then print a test invoice to make sure its all good. You can then set this new style as your default invoice.