Hello there, stefaniee.
I've got insights on how VAT works in QuickBooks Online and ensure that VAT payable on purchases is accurately reflected in your account.
Please know that when manually creating or adding a tax rate, make sure to check the Purchases box. Then, you also need to choose the This tax is collected on purchases box whenever you set a custom tax rate. This ensures that you collect the correct amount of data and accurately display the VAT payable on purchases.
I recommend reviewing all your manually created tax rates and checking if those are configured to track VAT on your purchases.
Here's how:
- Go to the VAT menu on the left panel.
- Click the Edit rates button and locate each tax rate.
- On the ACTION column, select Edit.
- Review the details and enter the correct rate in the Purchase rate (%) field if needed.
However, once you've confirmed that your tax rates aren't set up for purchases, you'll need to delete them as altering them to make them eligible for purchases is currently unavailable.
Here's how to delete or deactivate:
- Go to the VAT menu.
- Select Edit Tax, then select Edit rates.
- Find the tax rate you want to deactivate, then switch it from On to Off.
Then, follow the steps below to configure tax rates to display as VAT payable on purchases on your end.
- Click on VAT on the left pane.
- Select Add tax.
- Choose Custom tax.
- Fill out all the fields needed in the Add tax panel. Place a checkmark for This tax is collected on purchases option.
- Enter the rate in the Purchase rate field.
- Place a check-mark for Purchase tax is reclaimable option if it is reclaimable.
- Click Save.
Once completed, you can now use those rates in future transactions. This is done so you can track your tax data accurately.
In case you need steps on how you can run a report to see lists of transactions that are included in each box on the tax return, you can read this article: Tax Detail Report.
Don't hesitate to add a comment below if you have further questions about managing VAT or any related QuickBooks concerns. I'm always here to help you, stefaniee. Have a good one.
