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christiaan
Level 1

VAT & Brexit

I have a question on post Brexit VAT, well, 3 linked questions.

 

We are as a small marketing agency that supplies both service and products.

 

Design service from Link UK to a Germany Customer.

We invoice the client in Germany.

Q:  Do we invoice our client VAT 20%, Zero, Except or Outside the scope - what is the QB Code.

 

Production Service Scenario A

We purchase from a supplier in Poland, we arrange the delivery to our client in Germany.

We invoice the client in Germany.

Q:  Will our supplier Invoice us, Link UK VAT ?

Q:  Do we invoice our VAT 20%, Zero, Except or Outside the scope - what is the QB Code.

 

Production Service Scenario B

We produce / purchase from a supplier in the UK, we deliver to a client in Germany.

We invoice the client in Germany.

Q:  Do we invoice our VAT 20%, Zero, Except or Outside the scope - what is the QB Code.

 

I look forward to any help.

35 REPLIES 35
Mark_R
QuickBooks Team

VAT & Brexit

Your issue with VAT codes ends here, @christiaan.

 

Let me provide the VAT codes based on the scenario given.

 

When you provide services or supply goods to a European based (Germany) VAT-registered customer, the VAT code you should use is ESZ (European Services Zero) or EGZ (European Goods Zero) when invoicing. This means that there's no VAT charged.

 

Also, when you purchase goods from a European (Poland) VAT-registered supplier, the VAT code that you should use is EGZ (European Goods Zero rated). With this, there's no VAT charged/reclaimed. And still, use the EGZ (European Goods Zero) code when invoicing your customer in Germany.

 

And last, when you purchase goods from a UK VAT-registered supplier, the VAT code you can use is S (Standard VAT). This is reclaimed from HMRC. Then, use the same code (EGZ) when invoicing clients from a European based VAT-registered customer.

 

I'm adding this article to learn more about the Brexit VAT: Brexit FAQ.

 

Please know that I'm just a reply away if you need any further assistance in managing VAT codes. Wishing you all the best for this year.

christiaan
Level 1

VAT & Brexit

Hi Mark

 

thanks for your reply.

these are the codes I have been using all through 2019 and 2020

 

i thought I might have changed with Brexit, similarly to how I trade with the US and the Far East, posting transactions as Out of Scope, apply VAT only when (if) landing in the uk.

 

so reading the below... nothing has changed ?

Joesem M
QuickBooks Team

VAT & Brexit

Thanks for getting back to us, @christiaan.

 

Yes, you're right nothing has changed with the VAT codes that you have been using in QuickBooks. This is to make sure that you're tax calculation is correct in filing taxes in the future.

 

Also, I'd suggest consulting your accountant. They can provide further guidance with the setup and provide more expert advice in dealing with this concern.

 

For additional information, I'm including some helpful articles that you can check about different VAT codes and how to submit a VAT return:

 

 

Let me know if you need anything else. I'm always here and ready to help. Have a nice day!

RosieC
Level 2

VAT & Brexit

Hi 

Just read this thread and find it confusing when trying to work out how best to record the vat on goods we import from Europe & elsewhere and goods we sell to Europe and elsewhere.

I was specifically wondering why you don't mention the new 2021 PVA tax codes?  You simply suggest using the old ECG 0%
Are we not supposed to use the new PVA 0% codes to enter the 0% import vat on goods we bring in?

Then on the sales of goods to the EU do we just continue to use the ECG 0%??

If you could offer some guide of simple guide on how to deal with this now we're post Brexit that would be great I just want to make sure the VAT return is correct and accounts for our EU sales and imports.

Thanks

Rosie

Thanks

Rosie 

 

 

katherinejoyceO
QuickBooks Team

VAT & Brexit

Thanks for joining this thread, @RosieC

 

There are preset VAT codes with zero rates in QuickBooks that you can select in applying them to your business. Though, I would suggest reaching out to your tax advisor or accountant if you're unsure about it.

 

If you need to create a sales tax item with a zero rate, you can follow these steps:a

 

  1. From the Edit menu, choose Preferences.
  2. On the Preferences window, select Sales Tax then go to the Company Preferences tab.
  3. Click the Add sales tax item button.
  4. In the Type drop-down, select Sales Tax Item.
  5. Enter the tax name, rate, and select your tax agency.
  6. Click OK.

 

I'm always around to answer your next questions if there are any. 

 

Rachel_7
Level 1

VAT & Brexit

Hi

 

I'm the same as Rosie - confused with the new VAT codes on imports & exports to Europe.

Pre- brexit I would receive a purchase invoice from eg spain and it would be given the 20% ECG vat code which automatically shows the reversal. Do I keep on using the 20% ECG code on purchase invoices or does this now change to the PVA20% code? If we do change it to this code then why doesn't it show the reversal as now it has just added 20% to the invoice amount?

 

The same for sales invoices - we used the 0%ECG on any invoices to customers in the EU - do we now use the 0%PVA code or does it remain the same as before brexit?

 

I've searched everywhere for these and out accountants can't help as they haven't dealt with quickbooks...

 

Thanks

Rachel

WeightsLtd
Level 3

VAT & Brexit

Hi

I’m in a similar boat to Rosie and Rachel.  Instead of using the 20% ECG for goods purchased from Germany do I now use 20% PVA?   I read in another thread that QB system is not working correctly for 20% PVA  so we should use 20% RC MPCC instead until it is fixed.

https://quickbooks.intuit.com/learn-support/en-uk/vat/import-vat-post-brexit-postponed-vat-accountin...

We are paying UPS for the VAT every time an import parcel is delivered to us so these invoices will be entered onto QB.  If I also put the supplier invoice through using 20% PVA (or 20% RC MPCC) won’t I be accounting for the same VAT twice?

 

Thanks

Lesley

RosieC
Level 2

VAT & Brexit

Same as Lesley, it's all a bit confusing and I'm still not sure what to do.

I thought the new postponed VAT accounting was now for all imports including those from the EU and further afield, so we don't physically pay any VAT to release goods from customs, it's all deferred, but we do have to report it all on the VAT return.

I've read that we are supposed to be getting some kind of monthly import VAT report from HMRC that lists all the import VAT for a period based on our EORI number. Not seen this yet, just relying on the VAT invoice from the likes of UPS/DHL etc. 

 

My questions are:

What VAT code in QB do I use to enter the primary goods invoice from my international supplier?
And is it the same VAT code for both EU and non EU suppliers? maybe PVA0?? 

If we do get a report on the import VAT from HMRC then how do I put that in QB & what VAT code would I use just to enter just the VAT?
I'm assuming if the report from HMRC doesn't materialise then can we just enter the VAT amounts from all the UPS/DHL invoices? But what VAT code do we use?

 

I just want to make sure it goes in the right boxes on the VAT return.

 

Then finally for EU sales do I just Z rate the sales VAT??

 

HELP!!!

Thanks

Rosie 

 

EmmaM
QuickBooks Team

VAT & Brexit

Hello Rosie, As we are not HMRC we cannot tell you specifically which code to use for which transactions we can say the PV codes are the post Brexit codes and yes there have been some issues so we are asking people to use  20% RC MPCC instead of the PV20% code so it calculates on the form and then go back and amend it once this issue is resolved. HMRC can advise what code they want you to use or you can confirm this with a trained accountant.

Rachel_7
Level 1

VAT & Brexit

That's really not helpful... 

 

HMRC doesn't know - our accountants say ask quickbooks and quickbooks say ask HMRC or accountants...

 

So basically no one really knows and the actual VAT code that we should use (or possibly not use as no one really knows).... doesn't work. Great.

RosieC
Level 2

VAT & Brexit

My Accountant is not sure either, i'm going round in circles!!

I've been told to ask Quickbooks.

 

Surely Quickbooks has a trained accountant on hand who can clarify this issue for everyone as i'm sure its very simple once you know how.

 

All we need to know is what VAT code in QB to use for goods purchased from the EU since 2021 (There have been various suggestion on this forum, some of which conflicting)

The we need to know how to enter a VAT only figure to account for the postponed import VAT (either from the reports from the clearance company or from the monthly summary report that supposed to be issued from HMRC) 

 

There is a helpful video from a competing accounting platform beginning with X on Youtube, they explain how to enter invoices from suppliers in France and Japan and what's different since 2021 and what VAT codes to use but of course their software has different codes to Quickbooks.

 

christiaan
Level 1

VAT & Brexit

I am so glad I raised this subject, and take a little comfort knowing that I am not alone.

My accountant is saying, nothing changes, keep invoicing as before - EGZ 0%!

 

Very confusing - if anyone has clarity please do update and confirm to all

thanks

 

Christiaan

 

RosieC
Level 2

VAT & Brexit

Yes everyone is in the same boat.

 

I will probably just enter my EU purchases with either ECG Zero or just Z Zero

 

I'm struggling with the VAT part though, when the VAT element comes through from UPS or whoever and its deferred then how do we enter that into QB??

Hopefully the answer will materialise before my next VAT return lol.

JoyPaperM
Level 1

VAT & Brexit

I came across this thread because I'm struggling with some of these issues too! Not sure I've got to the bottom of them but I did find out how to get the monthly postponed import VAT statement - see link below. Word to the wise - the statements are only available for 6 months so need to be downloaded (!) and it looks like you need to register with a (new/ additional?) linked government gateway ID in order to get them.

 

https://www.gov.uk/guidance/get-your-postponed-import-vat-statement

 

Hope this helps partially - if I find an answer to the VAT code queries I'll post back.

coreadviz
Level 1

VAT & Brexit

Hi Mark_R,

In QBO - I dont see tax code EGZ (European Goods Zero rated) and the EGZ (European Goods Zero) code .

 

I can see old tax codes 0%ECG and 0%ECS. They are effectively producing Box 8 of tax return that is not required to be populated after Brexit.

 

Regards,

Rajiv

 

EmmaM
QuickBooks Team

VAT & Brexit

Hello Coreadviz, Can you go to taxes>edit vat>edit rates and check if the codes you need are there and just need to be toggled on?

matt731
Level 1

VAT & Brexit

Hi Emma,

I don't have the EGZ and ESZ tax codes either, and they are not in the list in the Taxes settings at all. I still have ECS and EGS. Can I just use these?

thanks,

Matt

ReymondO
QuickBooks Team

VAT & Brexit

Hey there, @matt731.

 

I can walk you through the steps on how to set up these VAT codes in your QuickBooks Online account. However, when it comes to choosing the correct codes, I'd suggest getting in touch with your accountant. They are the ones who can provide you the proper guidance to accurately track your taxes.

 

If you don't have any accountants near you, you can use this link to find one: https://quickbooks.intuit.com/uk/find-an-accountant/

 

In addition, you can check out this article for further guidance about the standard VAT codes listed in QuickBooks: Common VAT Codes.

 

Just tag my name in the comment section if you have any other concerns or questions. I'll get back to you as soon as I can. Stay safe.

cgardt
Level 1

VAT & Brexit

The codes suggested are not in the list of tax codes.  I have also changed the settings to show inactive but they are still not there.  Please can you let me know when they will be available to 'toggle on' as my return is due at the end of the month.

Many thanks

Claire

CarmenNovo
Level 2

VAT & Brexit

Hi everyone , check the link below :

 

https://accountsco.it/resources/quickbooks-import-export-vat-post-brexit/

Overview

From 1st January 2021 (post Brexit) new rules apply for accounting for import and export VAT. This has made recording imports and exports on QuickBooks quite a lot harder. This note explains some of the new rules and how to record import and export transactions in QuickBooks. You can see a similar note for Xero here.

Exporting goods

The rule for exporting goods is quite easy: you just need to zero rate the invoice when you export goods to anywhere outside the UK. To prove that you have exported the goods you need to make sure that you have evidence of the export. If you don’t meet these conditions you need to treat as a normal UK sale.

To fill out the VAT return you only need to complete one box: Box 6 – Total value of sales and all other outputs excluding any VAT. The QuickBooks VAT code that you should usually use is 0.0% Z.

You can read more about export rules in VAT Notice 703.

Importing goods

The rules for importing goods are a bit more complicated, but as was the case before Brexit, you still need to provide your UK VAT number to your foreign supplier so that they don’t include overseas VAT on their invoice, and you still can’t reclaim EU VAT on a UK VAT return.

Postponed VAT accounting

As a reminder – Import VAT applies to commercial goods brought into the UK with a value of more than £135. Basically, in these cases the importer has two choices:

  • use Postponed VAT Accounting (PVA) and include the import VAT that you need to pay on your VAT return; or
  • Pay the VAT at the border.

You must use PVA in the period to 30 June 21 if you delay your customs declaration or use a simplified customs declaration. Most businesses will want to use PVA because there is a cash flow advantage. See https://www.gov.uk/guidance/check-when-you-can-account-for-import-vat-on-your-vat-return) for more details on who can and cant use PVA.

When you complete your customs declaration you need to tick a box that says that you will use PVA. This will result in HMRC creating a “Postponed Import VAT Statement” which is available from your Government Gateway Account. You will need this when you complete your Xero VAT return.

The VAT return and postponed VAT accounting

The boxes that you need to fill in for Postponed VAT Accounting are as follows (Read here if you are interested):

  • Box 1 – VAT due on sales and other outputs
  • Box 4 – VAT reclaimed on purchases and other inputs
  • Box 7 – Total value of purchases and all other inputs excluding any VAT

The QuickBooks VAT code to use is either: PVA Import 0.0% (if the goods are zero rated); or PVA Import 20.0% (if the goods are standard rated goods). Note that when I wrote this note the PVA Import 20.0% functionality wasn’t working. Both of these codes need to be enabled on QuickBooks before they are used. To do this log into QuickBooks and go: Taxes/Edit VAT/Edit Rates. Select the gear and click on ‘Include Inactive’ then toggle the two rates on. It might also be a good idea to take the opportunity to deactivate VAT codes that you don’t need any more.

Exporting services

The rule for exporting services is easy: you need to zero rate the invoice when you export services to anywhere outside the UK. Most zero rated sales invoices should mention the reverse charge: “This invoice may be subject to reverse charge and VAT may need to be accounted for by the customer.”

To fill out the VAT return you only need to complete one box: Box 6 – Total value of sales and all other outputs excluding any VAT. The QuickBooks VAT code that you need to select to do this is 0.0% RC.

Importing services

The rule for importing services is also easy in that you usually need to reverse charge the service that you import. The boxes on your VAT return that you need to fill in are:

  • Box 1 – VAT due on sales and other outputs
  • Box 4 – VAT reclaimed on purchases and other inputs
  • Box 6 – Total value of sales and all other outputs excluding any VAT
  • Box 7 – Total value of purchases and all other inputs excluding any VAT:

To achieve this on QuickBooks you should select the QuickBooks VAT code: 20% RC SG.

As before, mention the reverse charge on your invoice: “This invoice may be subject to reverse charge and VAT may need to be accounted for by the customer”

 

Overview From 1st January 2021 (post Brexit) new rules apply for accounting for import and export VAT. This has made recording imports and exports on QuickBooks quite a lot harder. This note explains some of the new rules and how to record import and export transactions in QuickBooks. You can see a similar note for […]

 

 

Happychat
Level 1

VAT & Brexit

Hi CarmenNovo,

Thank you SO much for explaining this in such a straightforward way. Smiley Happy

This is a great help.

I hate Brexit! Think I might relocate to Italy!

CarmenNovo
Level 2

VAT & Brexit

No worries, hope it helps ! Smiley Wink

RosieC
Level 2

VAT & Brexit

Thank you this is very helpful, much appreciated.

You might be able to help me with one last thing - this is more to do with actually inputting the bills in QB
Sorry if its a bit obvious to most people.

To clarify.....

So......invoices come in from a supplier in Germany, & if they know in advance we're using PVA then we can enter that bill using a Zero vat code?? or a ECG Zero?? as there is no VAT to pay. Does it matter which?

Then we get the PVA statement from HMRC with a list of all our import transactions and a total VAT figure.
Do I enter this as a big VAT only bill? BUT how do I make it so the bill is not looking for payment??

Should I enter a line with 0.1 and a line with -0.1 then adjust the VAT amount? 

And is this where I use the PVA vat code? And should it be PVA 20% or PVA 0?

This is the bit i'm stuck on.

 

Many thanks

Rosie

 

Rachel_7
Level 1

VAT & Brexit

Hi Rosie

 

So if your company is in the UK ECG isn't used I think as its from one EU country to another. If you have declared postponed vat accounting on your declaration the PVA code should be used. The % depends on the foods only use the 0% is the goods are zero rated goods.

 

I just put on the invoice for the goods on the supplier account and used the PVA20% However! this code isn't working - I was on a chat with quickbooks yesterday and they said they are trying to fix it and in the mean time to use the RC MPCC 20% code and then when the issue is resolved to amend it the the PVA. 

This code is like the ECG it's a reversal code but I asked and they said it will affect the vat return in the way that PVA should. Only issue is that the vat box isn't amendable like it is on the 20% standard code. 

I asked my accountants and they said to put the net so the vat is correct then put on a credit using an EXEMPT vat code to adjust the difference.

 

Hope that helps a little and makes sense??