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NFendall
Level 1

Initial VAT Reclaim

We have just registered for VAT after trading for 2 years. I know that we can reclaim all historical VAT that has been paid on non-stock expenses, and we can reclaim the VAT for the inventory that we had on hand as of the date that we registered for VAT.

 

I've seen a couple of threads on here on how to claim historic VAT but I have a couple of additional questions.

 

1) I have submitted a blank / nil value VAT return for the period preceding when my VAT registration goes live, I understand that I have to do this to be able to trigger exceptions for historical VAT. But, do I have to submit a blank VAT return for the last 2 years? Would the bills that are dated prior to the VAT period of the blank VAT return still get triggered as exceptions? If not then how do I include all of the last 2 years worth of non-stock bills in my first return? (I'm happy to go back and edit them as there's not actually that many to do)

 

2) What is the best way to calculate the VAT reclaim on the inventory as of the VAT registration date? The only way I can see to do it would be to run an inventory valuation report as of the VAT reg date and then adjust the VAT on prior invoices but only to the quantity that was left in stock - for example. If I was invoiced for 10 items, sold 4 before my VAT registration date, and had 6 in stock when my VAT went live I would split the invoice line in to 2 with the first line of 4 items at 0% VAT and the second line of 6 items at 20% VAT? 

This seems messy but I don't know how else I could do it?

1 REPLY 1
SarahannC
Moderator

Initial VAT Reclaim

Hello NFendall, I'm happy to address your concerns above.

 

As long as it falls under the exceptions or reimbursable expenses, we'll have to submit a blank VAT return for the prior years. If you're unsure about it, you can consult your tax advisor. And bills that are dated before the VAT period get as exceptions. To apply this one, we only have to set it up properly. I'll show you how:

 

  1. Set reclaimable transactions as No VAT.
  2. Go to the Taxes menu and select VAT.
  3. Click Edit VAT. Then, choose Prior to the start date of your first return.
  4. Click Save.

 

I agree about splitting the invoice lines for the items and VATS. Still, I recommend consulting your accountant to calculate the VAT reclaim on your inventory. They can help and guarantee that to track accurately and share the best way of handling this scenario. You can pull up the Inventory Valuation report and use it as a reference when doing the task. 
 
You can check these articles for more details about filing VAT returns and VAT reports:

 

 

If you have other concerns about VAT returns and anything  related to QuickBooks, please let me know by commenting below. I'm happy to help and provide the details you need. Take care and have a good one.

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