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billygreenway
February 3, 2022
Solved

Accounting for VAT payments

  • February 3, 2022
  • 2 replies
  • 0 views

I am a business that is not registered for VAT and as such have made VAT payments on import of inventory purchases.  

 

Should VAT be accounted as a Cost of Goods Sold or as an expense?

Best answer by payment after leaving

Hi billygreenway You could create a specific cost of goods account for the VAT element of the transaction. As we're not accountants any information that we provide should be qualified by a professional. There may however be an accountant/professional here on the Community that you provide you with further advice.

2 replies

A
Ashleigh1
February 3, 2022

Hello Billygreenway, 

 

Welcome to the Community page, 

 

So it is an expense as you have brought the item and have imported it. 

B
billygreenwayAuthor
February 3, 2022

Why is it not cost of goods sold?  Since if I bought an item that included VAT and then resold it then it would count as a cost of goods sold?

P
payment after leavingAnswer
February 4, 2022

Hi billygreenway You could create a specific cost of goods account for the VAT element of the transaction. As we're not accountants any information that we provide should be qualified by a professional. There may however be an accountant/professional here on the Community that you provide you with further advice.

paul72
paul72
February 4, 2022

Hi @billygreenway 

 

If you aren't VAT registered then there's no need to think about or separate VAT at all.

Just enter the line on the bill as the total cost (no need for a separate line showing VAT).

If you want to enter as a separate line, enter the VAT in the same category/account as the purchase itself.

 

Hope this helps.

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