Hi Mark,
We have bought an item of plant from Germany and been charged German VAT
I understand that I have to reclaim this by application to HMRC but am less sure how to record on Solar.
I have read the topic on the subject but have the following questions:
I wish to record a purchase invoice, do I enter only the nett value of the goods and set VAT out of scope?
If I put in a seperate line for the MwSt whast account do I set? negative EU VAt Asset?
If I then add a money paid out transaction set as a general payment (as per help topic) the PUR does not close
If I leave the payment linked to the PUR there is no option to set multiple accounts for sources of payment, do I have to post two Money Paid Out transactions one from Cheque Accout and One from The EU reclaim asset?
Hi Simon,
Just to make sure I understand: You paid the net amount plus German VAT to your supplier in one payment, and you expect to receive a refund of the VAT from the German tax authorities. Is that correct?
Regards,
Hi Mark,
Correct so far, Germans to refund via HMRC as I understood it, however the goal posts have moved:
I've been told several different things about the way this should work but the prevailing opinion now seems to be that the German supplier should not have charged German VAT (I'm VAT registered and supplied my number) and should refund it direct!
I've mailed them to ask them to do that so we'll see what happens!
I also have a VAT (UK) inspection next week so will lay this one on the inspector and see what she says.
If I get the German Tax refunded then I assume a PUR for nett value with VAT treatment set to EU goods and rate at 0%? And the invoice payment will follow suit?
Regards
Hi Simon,
Let me answer your original questions in point form:
The 'VAT' column on the purchase invoice refers to UK VAT, which does not apply in this case. So yes, enter the net value of the goods with 0% VAT and set the VAT Treatment to 'Out of Scope'
Yes, enter an additional invoice line allocated to the 'EU VAT to Reclaim' account. But the amount should be positive and match the amount of German VAT you have paid to your supplier. This will result in an increase in the balance of the 'EU VAT to Reclaim' account.
Record a payment with the Type set to 'Invoice Payment'. You should only need to record a single invoice payment for the gross amount, with the Paid From Account set to 'Cheque Account'. Later, when you receive the refund, record a General Transaction as shown in Step 3 on our Help topic for EU VAT:
http://www.solaraccounts.co.uk/help/how-to-reclaim-eu-vat.php
Of course, this assumes that you apply for the EU refund through HMRC. If your supplier refunds the VAT and issues you with a new invoice without charging VAT (as they should have done originally) then just record a Purchase Invoice with the VAT rate of 0% and VAT Treatment as 'Purchase of Goods from EU Supplier'.
Regards,
Thanks Mark - The Germans are refusing to refund the VAT (computer says no!!)
I have entered the PUR and PAY transactions as you describe and hope to reclaim German VAT via HMRC
I assume I have to manually adjust boxes 7&9 on the return to incorporate total EU transaction figures as the transaction set is out of scope.
I'm a little shaky on why we are setting this out of scope as I thought I still had to account for the UK VAT?
Hi Simon,
I don't think you can reclaim German VAT on the standard UK VAT return (this is why the transaction is 'Out of Scope'). Instead, you will need to ask HMRC for a separate form which will allow HMRC to reclaim the German VAT on your behalf. However, I'm not an expert on this topic - please check with your accountant.
Regards,
Hi Mark,
So this issue has finally been resolved! There is no means for reimbursement of this EU VAT via HMRC or their EU(German counterpart) under these circumstances so I either had to suck it up and accept the loss or get the supplier to refund.
A final round of emails with some robust discussion finally saw the supplier refund the MwSt (Horray!!)
My issue now is that with all the different transactions (via multiple parties) all incorporating exchange rate errors, the invoice and the payments don't tally!
Neither I or the supplier is wanting to engage in further interaction so I have to work out how to record this in Solar!
It boils down like so:
Final (correct) purchase invoice
Dear Simon
If it is a B2B supply from Germany to UK then VAT should not be charged on your invoices. Correction to be asked to your DE supplier.
In specific scenarios (e.g. delivery in Germany), VAT may be charged and you can apply for VAT refund. However the German VAT legislation must be taken into account. You can have an overview here: http://vat4u.com/vat-rates/.
For both scenarios we would be happy to help you if needed (VAT refund in DE and all EU or supplier invoice correction). info@vat4u.com
