Question

How should I record VAT when it is paid separately from the original invoice?

Forum|Forum|3 years ago
October 23, 2022
2 replies
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Hi all,

This is my first post here, so if I make an error of etiquette, please bear with me.

Here is my problem:

I ordered parts from China via AliExpress. I paid the requested amount, which covered the products and the shipping. So far so good.

As expected I then received an invoice from FedEx for import duty and (here’s the issue) the VAT.

So, I have an invoice for £57.85 from FedEx of which £41.35 is VAT. I tried to post the £41.35 directly into the VAT Control account but probably not surprisingly the system said, “No” …

I considered adding the £57.85 to the original invoice from AliExpress but that feels wrong because I have an invoice from FedEx.

All and any (helpful) thoughts would be much appreciated.

Thanks

QuickBooks Online

MaryLandT

Let me help you record the VAT you've paid, Essig-Meister.

You can create an expense transaction to record the VAT payment you've made to HMRC. Let me walk you through how to do it.

Before proceeding, make sure you already have an Expense account. It's used to track the VAT payment. Here's how:

Go to the Accounting menu.
Click the New button.
Choose Expenses for the Account Type.
Select Taxes Paid for the Detail Type.
Enter a Name (i.e HM Revenue & Customs) for this account.
Click Save and Close.

Once completed, you can create an Expense or Cheque transaction to record the VAT Payments. Here's how:

Choose the New (+) icon.
Pick either Expense or Cheque.
Select the VAT agency from the Payee drop-down.
Enter the necessary information.
From the Category details section, choose Taxes Paid account for the Category, Description, and Amount, then select No VAT for the VAT column.
Click Save and close.

On the other hand, you can follow the steps below to record VAT payments in QuickBooks.

Go to the Taxes menu.
Choose the VAT tab.
From the Returns section, locate the returns you've paid.
Click Record payments from the Action columns.
Enter the VAT payment details.
Click the Save button.

Aside from the steps I've given above, you need to mark the VAT return of those dates as Filed. This way, we'll have the correct reporting. I'm adding these articles to help you manage VAT in QuickBooks.

I'll be around if you need more help about tracking your VAT-related transactions. I'm always here to help you.

E

Essig-MeisterAuthor

Hi MaryLandT,

Thanks for your reply.

Just to be clear I have paid the VAT to FedEx and so am now looking to reclaim that figure from HMRC. The problem I have is that the amount of VAT on the FedEx invoice amount to 71.4% (rather than the "normal" 20%). In other words, if I enter the £57.85 as the invoice total QB would expect the VAT to be £11.57 rather than the £41.35 that has actually been charged.

Do any or all of your suggestions achieve this?

Many thanks!

MJoy_D

Thanks for getting back to us, @Essig-Meister.

I can share additional information that can help you record your VAT transaction.

You can create an expense and enter it as Exempt for the VAT code or adjust the VAT option. For detailed guidance about these two methods, check out this article: Enter a 100% transaction in QuickBooks Online. You can choose which method works best for you.

I still advise consulting with your accountant. They can give you some advice on what VAT codes to use based on your recording practices.

When you make a VAT payment to HMRC or receive a refund from them, here's how to record them in your account: Record a VAT payment or refund in QuickBooks Online.

Let me know if you have other questions about VAT returns. I'm always around if you need any help. Have a wonderful day!