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InspectorTom
December 12, 2021
Question

Should Expense Amounts Inclusive of Tax have the VAT Reclaimable box ticked by default? I understand this is an HMRC requirement to accurately report box 7.

  • December 12, 2021
  • 1 reply
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Original commenter did not share additional details

1 reply

M
mv32
December 12, 2021

Thanks for dropping your concern and knowing our system's VAT defaults, @InspectorTom.

 

To confirm, are you referring to the Amounts are box when creating an expense or a bill? If so, yes, the Inclusive of Tax is the system's default VAT option to reclaim taxes. Please know that you can select other tax options by clicking the drop-down arrow whenever required by the HMRC to change it.

 

However, if you're referring to the Inclusive of VAT box in the Products and services set up, this is not a system default choice. You can untick this box if it is not required by the HMRC.

 

I'm adding these articles for your reference in the future if you want to report and check the boxes in tax returns:

 

I'll keep my notifications open. If you have other concerns about setting up VAT in QuickBooks, please tag me (@Jovychris_A). I'm looking forward to assisting you more. Take care.

I
InspectorTomAuthor
December 12, 2021

Thanks for the prompt reply and sorry my question wasn't clear as I didn't include a screenshot, hopefully this better explains what my words can't:

 

Both screenshots taken from the expenses detail, the second showing the contents of the local help tip which I believe is quite misleading as I think this box should be ticked be default regardless of whether its for a capital item valued over £2k!

AlcaeusF
AlcaeusF
December 12, 2021

Hello @InspectorTom,

 

Thank you for providing screenshots of the VAT Reclaimable box in QuickBooks. Allow me to chime in and provide clarifications regarding the local help tip.

 

The possibility of the VAT portion being reclaimed back from HMRC depends on the purpose of the actual purchase. If the VAT on expenses is only partially recoverable, the VAT is charged in full, and subsequently, the recoverable amount can be reclaimed at a later date.

 

That's the reason why users have the option to either tick the VAT Reclaimable box or not. For the local help tip, the system is referring to a single purchase of capital expenditure goods where the amount of the purchase, including VAT, is £2,000 or more.

 

No VAT is claimable if the supply is:

 

  • more than 1 purchase
  • under £2,000 including VAT
  • of services

 

To learn more about it, please refer to this link (scroll down to 15. Capital expenditure goods): VAT Notice 733: Flat Rate Scheme for small businesses.

 

I've also attached an article you can use to learn more about VAT filing frequency, like what you can do if you expect to reclaim VAT regularly: VAT: Getting started.

 

Feel free to hit that Reply button if you need more help entering expense transactions or using the VAT Reclaimable option. Have a great day ahead.

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