Skip to main content
L
leecarlsen
February 12, 2020
Solved

Interesting cross trade - how is VAT applied/ recorded?

  • February 12, 2020
  • 1 reply
  • 0 views

Here's a summary of what we are going to do and would love to get your views on how we should record the transactions and VAT codes in QBO?

 

  1. We are a UK VAT registered company
  2. We are purchasing goods from a supplier in Turkey
  3. They will not be imported into the UK
  4. The goods will ship directly from Turkey to our customer in Ireland
  5. Our customer is a VAT registered company in Ireland.

 

Our thinking:

  1. Bill from Turkey will be tax code No VAT - they are non EU/ non UK
  2. We won't pay import duty or tax as the goods won't enter the UK as an import
  3. Sales invoice to customer will be tax code ECG 0%

 

Are we thinking correctly?

 

Thanks in advance folks!

Best answer by Ashleigh1

Hello Leecarlsen, 

 

Thanks for reaching out to us on the Community page,

 

Having looked into this your thinking will work however we are not trained accountants and we cant advise what vat codes to use.

 

We appreciate anyone who has had similar situations to comment on this thread on the Community page.

1 reply

A
Ashleigh1Answer
February 12, 2020

Hello Leecarlsen, 

 

Thanks for reaching out to us on the Community page,

 

Having looked into this your thinking will work however we are not trained accountants and we cant advise what vat codes to use.

 

We appreciate anyone who has had similar situations to comment on this thread on the Community page.

paul72
paul72
February 13, 2020

Hi @leecarlsen 

 

This is the sort of thing that you should really run past your accountant.

Having said that...

1.  I would use a VAT Code that logs on the VAT100.  The No VAT code doesn't put any amounts on the VAT return & I'm pretty sure that imports/exports should be on there (boxes 6 & 7).   I have an Import/Export code but you could use Z=0%.

 

2.  Unless the goods are exempt, you or your customer will be responsible for the import duty (& VAT) at the EU border.  However, this is contractual - are you selling delivered & duty paid or making it clear to the customer that the VAT/Duty is down to them?

(As the goods are to be customs cleared in Ireland, it would obviously be easier for the customer to deal with but they could pass the costs on to you if your agreement isn't clear.)

 

3.  Sale invoice using ECG-0% is fine.

 

 

Obviously, all of the above goes out of the window after 31st December.

L
leecarlsenAuthor
February 14, 2020

Thanks to you both @paul72 @Ashleigh1  for responding to my post, I'm very grateful and having another opinion on things really helps. I'm keen to ensure the VAT100 is correct and will involve the accountant before finalizing our plan for managing the transactions.

 

As always there's more than one way to handle it, each with benefits and drawbacks.  I  like the idea of a custom import/ export tax code  - if I understand your comment correctly @paul72 - I'm not a fan of using Z as it indicates there is VAT but it's at 0%.

 

Incoterms are in hand so no worries knowing who's responsible with regard to certain charges.

 

Thanks again!

Terms & ConditionsAccessibility statement