I have an expense regarding the import duty and import VAT that we paid when importing stock to the UK from China. The total invoice cost was £11,329.56 (see attached image) and this is showing as an expense in QuickBooks that I need to categorise. It is comprised of £1,303.47 for Import Duty paid and £10,026.09 for Import VAT paid.
How do I categorise this expense? I can split the expense
amount in to each type but the maximum VAT I can select is 20% whereas the
Import VAT expense is all VAT. No option available categorises the expense as
fully VAT expense for me which I need for my tax return. (see second attached image)
Thank you for your query!
Recording a 100% VAT expense can be a bit tricky in QuickBooks, but don't worry, we have a a step-by-step guide on how to record it.
Please follow these steps:
1, Click on the + sign and choose Expense
2, Either choose a payee or leave that box empty
3, On the first line of the expense choose any of your Expense accounts
4, For the amount enter a pound (1) and choose 20% S as your VAT code
5, On the second line choose the same expense account
6, For the amount, enter minus a pound (-1) and choose No VAT as a VAT code
7, The total of the expense will show as 0
8, Under the Subtotal box the VAT box become editable
9, Enter the desired VAT amount into the VAT box and save the expense
10, This will create a 100% VAT transaction
This transaction will show in Box 4 on your VAT returns.
Let me know if you have any queries. Or, if you'd like to go through this over the phone, you can call our dedicated team who will be happy to assist you. Our contact details can be found here along with our opening hours
For instance I entered £1 inc. VAT for cost of sales and -£1 no vat for the same account. In cost of sales account QuickBooks will deduct £1 and add 0.80p. This mean that there is affected balance on account of 0.20p which will impact profit/loss and as a result corporation tax will eventually increase for no reason. Are you sure it is a correct method?
Welcome to the Community Naren and thank you for your question.
Would this be a 100% VAT transaction you are trying to record? We would always suggest speaking with an accountant as to how to reflect these transactions in your account as to which account to post them against this article here for 100% VAT may help.
Please let us know if there is anything else we can help with.
I'm having the same issue and to be quite frank this seems an absolute mess and a bit of a joke having to do so many steps just to record a fairly common transaction type. My issue is that if you record £1 with standard vat then -£1 with no vat then that still leaves vat on the £1 transaction so 20p.
Thanks for joining this thread, @arankin1983.
To categorise the taxes, you’ll have to enter them on a separate line item. I suggest following the steps provided by @RitaIntuit.
Since there’s a remaining 20 penny showing in the Includes VAT field, manually remove the amount and enter the correct one. This alternative solution will help keep your records in tiptop shape.
For further information as to what specific VAT code to use for goods that are purchased from an EC member state and how it shows on the tax return, check out this article: Common VAT Codes.
If there's anything else I can help you with, post a comment below. I'm here anytime to assist further.
I am doing all the above, and that’s working fine. But it then changes the balance in that account. and deducting the 100% vat amount from the balance.
So if my current account balance is 10k and I put £15k in as 100% vat it’s showing my quickbooks balance as -£5k
Hi, Urbancuk .
You might want to the transactions created and ensure that they have the correct VAT codes.
Once verified and still getting the same issue, it would be best if you reach out to our QuickBooks Support who can review the details and make sure that you'll be provided with the right resolution. You can reach us through this link: https://help.quickbooks.intuit.com/en_GB/contact.
To ensure we address your concern on time, check out our support hours. Also, I'm enclosing a few resources to learn more about QuickBooks VAT codes:
If you have any questions or need help with other matters about QuickBooks, let me know in the comment below. I'll be happy to share and provide guidance whenever you need it. Have a productive week!
A better way seems to be create a tax rate of 100%, then do as above with the £1 then -£1, then edit. Its got ride of the extra transaction for me at least.
But this really should be done in a much simpler way as its something every company who import anything will have to deal with
Hi I have a import VAT invoice from DHL for £216.68 VAT I have followed what you have described below and put in a minus £216.68 VAT that was okay but now when I go to the VAT return box I have minus £216.68 showing as VAT paid on purchases and £264.00 showing as Due on invoices but when you go to the VAT return it is showing a balance owed as £480.68 how can this be as it should be a balance of £47.32
What has happened.
Thanks for joining us here in the Community, @exsup.
I'd like to ensure that we're on the same page so we'll be able to get this issue sorted out.
For me to provide an accurate resolution, I'd like to ask for a screenshot of how you enter the VAT only transaction as well as the figures on your return. This way, I'll be able to check its set up and narrow down this concern.
I'll be keeping an eye out for your response on this. Take care!
I essentially have the same query but do not understand your work around.
You start by instructing to click on the + sign do you mean the '+ new button top left ?
And if this is correct and we create a new expense and putting aside all the accuracy issues with this how do we link (reconcile) this new entry we've manually created a 100% VAT amount on with the entry in the banking feed from our bank accounts?
Thank for joining this thread, @tom.
Yes, you got it right. What my colleague is referring to is the + New menu from the top left in your QuickBooks Online (QBO) account.
Once done, open your banking feeds and thick Find match to link the entry to your bank feeds. I’d be glad to guide you how.
You can also read through this article for more details about matching transactions in QBO: Categorise and match online bank transactions in QuickBooks Online.
I’d also recommend reaching out with your accountant for further guidance. This way, we’ll ensure your accounts are well accounted for after doing this.
I also have here an article that you can read to guide you in reconciling your accounts effectively in QBO: Reconcile an account in QuickBooks Online.
In case you have other clarification or questions, you can always post a reply. I’ll be around to answer them for you. Take care and keep safe.
Thanks for the previous info. I've managed to decipher the full process regarding the rather convoluted work arounds being offered in various forum strings and the missing steps many of these instructions seem to contain...or not as the case maybe! Much of my information as come from other users and not just QB's
This seems to be a considerable and broad technical issue with QBO that has been going on for a few years as I have found forum references going back to 2018 but quite possibly further. Considering the changes to VAT due to Brexit I would hope QBs now see the need to create functionality around this as a matter of priority or you could seem many customers leaving.
In the mean time I have a 3 page document covering ALL the steps necessary to resolve this however as I have also previously read HMRC in the UK don't take too kindly to workaround as it is messy and opaque. and please stop referring your customers to seek advice from their accountant or HMRC the problem is QB's lack of functionality not the tax process.