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didem_berzek
January 10, 2024
Question

Hello, I am seeking answers about the VAT codes we use for non-registered businesses in VAT returns. Is the VAT rate should be no VAT and not declared in box 7? And why?

  • January 10, 2024
  • 2 replies
  • 0 views
I have asked this question to the VAT specialist and I received the answer below which conflicts with QB guidelines. Please see below;
’You raise a very valid query and guidance is very conflicting of this point.  HMRC's own guidance does not refer to the value of purchases from non-VAT registered suppliers needing to be excluded from the Box 7 total so I would indeed agree that these supplies should be included.

2 replies

K
KimberlyS
January 10, 2024

Hello there, didem.

 

I can provide information about the tax code used if you’re not registered for VAT.

 

Goods or services that are exempt from VAT or do not fall within the scope of the VAT system in the country will be charged as No VAT. In this case, VAT returns will not show any of these transactions. 

 

If your business is not registered for VAT or doesn’t need to be registered for VAT, this tax code will apply to anything you sell or supply. Also, selecting this code should not be hitting any of the boxes.

 

You can review this article for more information: VAT codes in QuickBooks Online: A complete guide.

 

On the other hand, whenever you need to create exceptions, you can review this material for guidance: VAT exceptions and reports in QuickBooks Online.

 

Feel free to visit the Community forum if you have additional questions about the VAT codes or other related concerns in QuickBooks Online. We can always lend a hand.

paul72
paul72
January 13, 2024

Hi @didem_berzek 

For non-registered suppliers, use Z=0% VAT Code or Exempt (both have the same effect on the VAT Return).  QBD used to have a Non-Registered VAT code I think.  If you want to keep track, you could create one by copying the Z=0% code attributes.

 

See https://www.gov.uk/guidance/how-to-fill-in-and-submit-your-vat-return-vat-notice-70012#section3

Box 7 the total value of purchases and all other inputs excluding any VAT
Show the total value of your purchases and expenses but leave out any VAT.

 

As a general rule do not use NO VAT for anything you buy or use in the business.  It is for things that you want to keep off of the VAT Return entirely - things that are Outside the Scope of VAT.

 

NB - It's the goods/services themselves that determine the whether they're inside/outside VAT not the VAT status of the supplier.  The supplier VAT status determines whether VAT has actually been paid (& so can be reclaimed).

 

Hope this helps.

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