Could you please clarify the treatment of VAT to be reclaimed when paid on a Form C79?
The client makes a total payment of £3127.20 made up as to £3065.88 VAT and £61.32 import duty and I have posted the invoice as follows:
Delivery costs - VAT @ 20% - £ 15329.40
Delivery costs - VAT @ 0% - £-15329.40
Delivery costs - VAT @ 0% - £61.32
VAT treatment - Purchase of goods and services from UK supplier.
The input VAT correctly appears in box 4 of the VAT return, but as the £15329.40 is cancelled by the £-15329.40, the only amount shown in box 7 is £61.32.
Therefore, when the VAT return is being filed (pre MTD) HMRC show an error message saying the amount entered in box 4 exceeds the amount HMRC would have expected you to declare in comparison to the value entered in box 7.
Hi Russell,
Yes, that is the correct treatment except that the VAT Treatment should be
set to 'Purchase of Goods from Supplier Outside EU'.
You should record another transaction for the purchase of the goods for
£15,329.40 with a VAT rate of 0% (also with the VAT Treatment should be set
to 'Purchase of Goods from Supplier Outside EU') . This transaction will
increase your Box 7 figure and so you should not see the warning message
from HMRC about the Box 7 figure being too small.
