Out of Scope for VAT journal entries

Hello there, @finance109.

I'm here to guide you on how you can post a journal entry wherein you can select the appropriate VAT code for Out of Scope.

You'll need to set up a VAT code specific for Out of Scope. This way, you'll be able to select this code upon creating the Journal Entry.

To do that:

1. In the Tax Centre.
2. Select on Add Tax.
3. Add the Tax name (Out of Scope).
4. Enter the description of the code.
5. Select the accurate agency.
6. Key in the rate (0%).
7. Choose the account.
8. Press on Done.

From there this code will now show up on the VAT list on your journal entry. 

I'm also adding here some reference about setting up and removing VAT rates in QuickBooks Online:

• How do I set up sales GST/VAT rates and use them on forms? (International QBO)
• Remove a VAT or GST rate

Let me know if you have any other questions, I'll be right here to help. Have a lovely day!

Hi BettyJaneB,

Thanks very much for getting in touch.

I've noticed that if I add a tax code like this and set it up as 0%, then the transactions will still appear on my VAT return? I would like to exclude them completely hence using Out of Scope rather than 0%. Is there an option for this?

Thanks

Hello again, @finance109. I appreciate your prompt response. 

You're correct. Since when you select a VAT code on a transaction, it will report on the VAT return. 

Based on the information you provided on the original post, you've mentioned that there would be no VAT implication for such loan to the employee. Thus, for the transaction not be reported on the VAT return, you can leave blank for the TAXES column and not choose any VAT code when creating a Journal entry. 

As always, you may wish to consult for your accountant for verification. To ensure your books are accurate. 

Additionally, I want you to get the most out of QuickBooks for your business. You can check some articles that are designed to help you get acclimated to the software. They can be accessed at the following link: QuickBooks Tutorials.

If there's anything else I can do for you, let me know by commenting below. I'd be happy to further assist you. Have a great day. 

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Just commenting on this as I was looking at a similar problem.

I just wanted to clarify something for others that may be looking at this. 

Some of the terminology used causes confusion in how HMRC use it and how users and software packages may interpret it. Outside the scope supplies (due to place of supply) have to be included on your VAT return, i.e. the export of goods and supply of services to non-UK businesses (B2B) and certain services supplied to B2C customers will be outside the scope of VAT but the amount must still be reported in Box 6 of the VAT return. Therefore the advice given on setting up a VAT code called 'Outside the scope' works for these types of things.

For posting such as journals and things that are totally irrelevant to the VAT return we have a 'No VAT' setting which excludes those items completely from the VAT return. 

Hello

Need assistance regarding the below query

How do we get a list of 'out of scope' entries from QB to understand the transaction that are missed

Also, the VAT exception report is showing blank

It's great to see you in the Community, Kesarie!

I'll walk you through creating a report that lists all the transactions that are marked as "Out of Scope" and check why your VAT Exception Report is empty.

To find the list of transactions labeled as Out of Scope:

1. Go to Taxes.
2. Click the View reports drop list in the middle-right side.
3. Select Transactions without tax.
   
4. Change the Report period and click Run report.

The VAT Exception report pertains to instances where edits are made to transactions that have already been included in a filed VAT return. This process is designed to prevent any oversight or duplication of VAT. If no changes have been made to the transactions, the report will be empty.

I'm just a comment away if you need more help about the reports you mentioned. Take care and have a good one!