| Record invoice from an import agent |
Description | How to record invoices for overseas purchases when using an import agent or freight forwarder. If you import goods into Great Britain from outside the UK or from outside the EU to Northern Ireland you may have to pay import VAT on goods. If you use an import agent or freight forwarder to manage the import of goods for you, there are two ways the import agent may manage the import VAT depending on whether you're using postponed VAT or not. What you need to knowUsing postponed VATThe import agent may estimate the amount of import VAT due on the goods and indicate this on the invoice they send you. You then have a choice on how to deal with the import VAT: - Declare the estimated VAT when you record the invoice you receive from your supplier
- Declare the estimated VAT when you record the invoice from the import agent
- Ignore the estimated VAT and declare it when you receive the statement from HMRC
See Postponed accounting for Great Britain businesses for more information about how to account for postponed VAT. Not using postponed VATThe import agent will typically pay the import VAT for you and include this, along with the duty, on the invoice they send you. You then pay the import agent. |
Resolution | Set up a supplier record for the import agent Create a supplier record for any import agent or freight fowarder you use. Be sure mark the supplier as an Import Agent to make sure the VAT is accounted for correctly. You can’t record Quick Entry or Other Payment transactions for suppliers marked as Import Agents. - Go to Contacts and from the drop-down list click Suppliers. Click New Supplier.
- Enter the business name and a reference.
- Enter the relevant information.
- Select the Supplier is an import agent check box.
- Click Save.
Create a ledger account for the import VAT and duty To help you keep track of the money paid in import VAT and duty, we recommend that you set up a separate ledger account. - From Settings, then Business Settings, choose Chart of Accounts.
- Choose New Ledger Account and complete the following information:
Name: For example, Import VAT and Duty. Category: Direct Expenses Nominal code: Enter a number of your choice, such as 5101. On our default chart of accounts, direct expenses are usually in the 5000 range. VAT rate: Import VAT is generally charged on duty at the same rate as the item you’re importing. If you normally import items at different rates, you can leave this clear. If you do choose a rate, you can still change this when you enter your invoice. - Click Save.
Record the invoice from the import agent Not using postponed VAT If you are not using postponed accounting, the import agent will typically pay import VAT for you and include this on the invoice they send you. When you record the invoice, included a separate VAT only line for the import VAT. In our example, the import agent has charged you £2000 duty and £4000 import VAT. - Supplier invoice: VAT is not charged, so VAT is set to Zero Rate.
- Import agent invoice: Record the import VAT as a separate VAT only line. Select the relevant VAT rate as VAT is charged at the rate use to buy the goods in the UK. Make sure you do not select the Use postponed accounting checkbox.
- When you receive the monthly import statement from HMRC, check the VAT is the same as the VAT charged by your import agent. If not, enter a journal to adjust the VAT amount.
- Select your import agent.
- Clear the Use postponed accounting to deal with import VAT checkbox.
- Record the details of the duty from the importer invoice and select the ledger account you have set up for import VAT and duty. In our example:
Description | Ledger account | Net amount | VAT rate | VAT amount | Total | Charges and duty | 5101 | 2000 | Std | 400 | 2400 | - On a seperate line, enter a VAT only line for the import VAT.
Description | Ledger account | Net amount | VAT rate | VAT amount | Total | Import VAT | 5101 | 0 | STD | 4000 | 4000 | Use postponed accounting This where you estimate the amount of import VAT charged and so the VAT is declared and recovered on the same VAT return, rather than waiting for the monthly statement from HMRC. The import VAT can be estimated when you record the invoice from the supplier or when record the invoice from your import agent, if your import agent provides an accurate postponed VAT value for you. If you're recording estimated VAT with the importer invoice: - Supplier invoice: VAT is not charged so VAT is set to Zero rated. The Use Postponed Accounting checkbox is not selected
- Import agent invoice: Record the import VAT as a separate VAT only line. Select the relevant VAT rate as VAT is charged at the rate use to buy the goods in the UK. Make sure the Use postponed accounting checkbox is selected.
- When you receive the monthly import statement from HMRC, check the VAT is the same as the VAT charged by your import agent. If not, enter a journal to adjust the VAT amount.
- Select your import agent.
- Select the Use postponed accounting to deal with import VAT checkbox.
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Record the details of the duty from the importer invoice and select the ledger account you have set up for import VAT and duty. In our example: Description | Ledger account | Net amount | VAT rate | VAT amount | Total | Charges and duty | 5101 | 2000 | STD | 400 | 2400 | -
On a separate line, enter a VAT only line for the estimated import VAT. Description | Ledger account | Net amount | VAT rate | VAT amount | Total | Import VAT | 5101 | 0 | STD | 4000 | 4000 | The import VAT is added and deducted from the invoice. Adjust the VAT when you receive your monthly statement Once you receive your monthly statement from HMRC, check that the VAT estimated by your import agent matches the import VAT due on the statement. Use the Overseas Purchase of Goods report to help you reconcile your VAT return, and make VAT adjustments where required. This now includes both EU and ROW purchases and shows which invoices have estimated VAT. If there is a difference between the estimated VAT and the VAT on your monthly statement, record an adjustment using a journal. In our example, we estimated the VAT at £4000 but the monthly statement is showing £3998 so we need to enter a VAT adjustment journal for the £2. - From Journals, select New Journal.
- Enter the details
- Add the amount of the adjustment on two lines, one for VAT on sales and one for VAT on purchases.
To reduce the VAT, record VAT on sales as a Debit and VAT on purchases as a Credit. To increase VAT, record VAT on sales as a Credit and VAT on purchases as a Debit. Make sure you select the Include On VAT Return check box. Ledger Account | Incl in VAT Return | Debit | Credit | 2200 VAT on Sales | Yes | 2 | | 2201 VAT on purchases | Yes | | 2 | [BCB:299:UKI - Personal content block - Dane:ECB] [BCB:302:UKI - Search override - Accounting UK:ECB] [BCB:276:UKI - hide back button:ECB]
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