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
Welcome to the Community.
Could you please send us some further details of the transaction or perhaps include some screenshots.
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?
Hey Irinka, Please can you post some screenshots of this happening on your books so i can accurately replicate it and advise?
I have a slightly different situation. We have paid Deferred VAT on imports directly to HMRC. How do I post this amount in QB to reclaim the VAT only amount?
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.