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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

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Best answer 02-07-2019

Accepted Solutions
Community Contributor *

Hello Nicky, The VAT margin scheme is not supported withi...

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

2 REPLIES 2
Community Contributor *

Hello Nicky, The VAT margin scheme is not supported withi...

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

Experienced Member

Re: 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.