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Post Info TOPIC: VAT Exempt Business Purchase Invoice Recording


Newbie

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VAT Exempt Business Purchase Invoice Recording


Good evening,

Im helping a new business whos sales are all VAT Exempt, therefore they cannot register for VAT (I think?) - my question is, how should I be recording their purchase invoices (in xero) should they all be entered as no VAT as none will ever be reclaimed, or should they be entered with the VAT rate charged and if so, then why?

Many thanks :)



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Guru

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BGreg wrote:

Good evening,

Im helping a new business whos sales are all VAT Exempt, therefore they cannot register for VAT (I think?) - my question is, how should I be recording their purchase invoices (in xero) should they all be entered as no VAT as none will ever be reclaimed, or should they be entered with the VAT rate charged and if so, then why?


Hi Bonnie

You are correct, that a business that only makes Exempt supplies cannot register for VAT in the UK, are they definitely all exempt and not zero rated or outside the scope?

If not registered then just record the gross amount including the VAT of the purchases, if you were VAT registered and partially exempt then in Xero the purchases that relate to the exempt supplies would be recorded using the 'exempt expenses' VAT code.



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Doug

These are only my opinions of how I see things and therefore should not be taken as advice

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