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Old 09-11-2004, 09:00 AM
robr robr is offline
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Join Date: Jul 2004
Location: UK
Posts: 11
applying VAT

Hi, I have a limited company that is not registered for VAT. When I buy stock I am charged VAT and pay it. The VAT on the invoice is a line item and not as per individual item so when I add 17.5% to each item in Quickbooks the total VAT is not the same as on the invoice. This means that my stock value appears to be higher than it actually is.

What is the correct way of recording the VAT in Quickbooks bearing in mind that when I sell the item I include the VAT on a per item basis so that the price shown is including VAT only. Do I record the invoice as a total and not split the line items? Do I need to show the VAT charged me as a seperate item? Does it matter that the price to me that I am showing is not as per the invoice total?

Thanks for any help
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Old 09-11-2004, 10:49 AM
jpcentral jpcentral is offline
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Join Date: Jul 2004
Location: Loughborough, UK
Posts: 375
As I understand what you are saying:

You are not registered for VAT but your supplier(s) is. Your supplier's invoice includes VAT calculated on the total but you are trying to track the value of your stock by entering your supplier's invoices line by line and the total VAT calculated on individual lines is not the same as the VAT calculated on the whole invoice. You want to know how to properly record this.

I imagine that the difference can only be a few pence on each invoice caused by rounding and this may sometimes be up and sometimes down.

I suppose the proper accounting way would be to set up an item called "VAT rounding difference" or similar, then when you reach the last line of your bill entry you can simply add this item and put in an adjustment which may be positive or negative. At the end of the year (or periodically throughout) this figure can be adjusted to zero by whoever does your year end accounts. It should never be very large in any case.

Realistically, because the amounts are likely to be so small, I would just tend to adjust the last stock entry line (or choose one line at random) to make your figures balance with the supplier's invoice.

If you are not registered for VAT you shouldn't be recording VAT in the accepted sense because you can't reclaim it, so you should have switched off VAT recording in Quickbooks (Edit - Preferences -VAT).

If the answer isn't the answer to the question you think you asked, please post again with more info.
John P
Central Business Services
(01509) 816150
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Old 09-14-2004, 03:58 AM
robr robr is offline
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Join Date: Jul 2004
Location: UK
Posts: 11
Hi, thanks for the reply. That is indeed what I was asking. I am not tracking VAT as such but I need to record the price of stock purchased as including VAT and also to make the value of stock purchased equal to the invoice amount I suppose.

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