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• # 72216
• Wed 15 Jun 2011 01:55 PM

Hi all

I am just setting up the accounts for a new client and am looking for some guidance about VAT for foreign sales.  This is the first time I have dealt with sales to other countries, so want to sure I get it right!

Most of the clients sales are within the UK, but a few are to EC countries and the USA.

Am I right in thinking that the US sales are zero rated, and just added to box 6?

It is the EC sales that I find most confusing.  Is it that if the sale is to a VAt registered business then the sale is zero rated, and the only entry is to box 8? (and the buyers details are added to the EC sales list). 

If the buyer is not VAT registered (or the VAT details are unknown) am I right in thinking that the sale is at standard VAT, and boxes 2 and 8 are completed?

I realise this is fairly basic stuff, but not having dealt with VAT on foreign sales before I don't want to get it wrong.

Any guidance would be gratefully appreciated

Lucy

 

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• # 72219
• Wed 15 Jun 2011 04:02 PM

Hi Lucy!

EC sales and purchases will indeed hit the box 8 and 9 figures, and additionally the box 2 (for EC sales).

If you are using Sage (and presuming there is no VAT included either coming in or going out), EC sales of goods should be coded to T4, EC sales of services to T22, EC purchase of goods to T7, EC purchase of services to T23.

You will need to do a quarterly EC Sales declaration to HMRC, stating the VAT numbers of those EC customers, value of goods, and weight of goods. Of course if you are selling services rather than goods, EC sales declaration is not relevant. 

You'll also need to do Intrastat return....although I can't remember what they are right now, but HMRC website tells you all about it.

Outside of EU (like USA), VAT is Outside the Scope of VAT...Sage = T9 for both sales and purchases. Therefore sales and purchases to outside EU do not hit the VAT return anywhere.

It has been a few years since I did EC Sales, so I apologise if my memory is incorrect!

HTH
Helen xx

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• # 72250
• Thu 16 Jun 2011 08:55 AM

Hi Lucy

Depending on what accounting package you are using, if sage then provided you enter the correct VAT code in the customer record it will do most of the work for you.

EC Sales list submitted once a quarter and contains EU customers VAT Registration number.  If using sage there is an option to check VAT Registration numbers, and it will automatically check the format of the number is correct.  However, it is, in my view somewhat unfairly, down to your client to ensure that the VAT number is correct.  Businesses in most EU countries have the VAT number on their Letter Heads.  Sage will do this automatically.

Hellonwheels talks about intrastat return - these are only required for movement of goods with in the EU.  They do not have to be submitted until Intra turnover of trade hits a certain limit - currently £73,000 - matching the VAT Registration limit.

HMRC have specialised departments to help with intrastat should you require it.

You are right that if VAT Reg number is not provided at time of sale then you charge VAT at standard rate, or if customer not VAT Registered then must also charge VAT at standard rate.

Sales to US are 0 rated, however it is good practice to keep proof of export from the UK with the relevant sales documentation.  Should there be a VAT Inspection then HMRC will want to see proof that the goods left the country, much easier to find if attached to sales documents. 

With regards to Box 2 on VAT Return this does not relate to sales to EU countries but purchases that have made where your VAT has been reduced to 0. 

I hope this helps - any further queries please do not hesitate to ask - Before sitting ICB Exams I have worked in commerce with companies that export and import between EU and outside EU for > 16 years.

Kind regards

Nicki  

• Kind regards

  Nicki P

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• # 72264
• Thu 16 Jun 2011 03:48 PM

Thanks for the adivice

Unfortunetly as the books are to be done on Excel I can't rely on the software to do the work, I actually have to know how it works!

The clients customers are mostly in the US or this country, only occaionally is one in the EC.  The sales are for technical magazines.  I am taking over from a different bookkeeper, and I have noticed that the EC sales have not been seperated from the other standard rate sales.  Should these be listed seperately, and included in box 8? 

Basically, is box 6 all sales (standard and zero rated, including to the US) and box 8 any EC sales?

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• # 72282
• Thu 16 Jun 2011 08:32 PM

Hi Lucy,

Box 6 is all Sales and Box 8 is for EC Sales, as you rightly say.

This link will allow your client to check any EC VAT number and I advise printing off the Confirmation and attaching it to the first sales invoice for that customer to prove to HMRC that you have been vigilant.
 http://ec.europa.eu/taxation_customs/vies/

If the EU buyer is not registered for VAT, then VAT is charged and the VAT goes in Box 1 as usual and the Nett goes in Box 6.

Box 2 relates to a reverse charge of VAT on EU Purchases.

The 2010 limit for completion of Intrastat was £250,000 per annum and you will not be required to complete an Intrastat Supplementary Declaration until your sales are over this limit.  This is a rolling as opposed to a calendar year, but HMRC usually notify you by letter if they require a return.
As for sales to the USA, always ask the shipper for Proof of Export of Certificate of Shipment as HMRC will indeed require proof that the goods have been exported out of the EU.....otherwise your client could end up with a VAT bill....attaching them to the back of your copy of the invoice keeps things nice and tidy.

Hope this helps.

Tracey

• Tracey F Latto
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• # 72288
• Fri 17 Jun 2011 08:23 AM

Thanks for all the great advice.

I can now set up the accounts knowing that they are correct!

Lucy

 

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