Box 7 on VAT Return

[ADC]

I'm just wondering whether I have done my last VAT return wrong and was wondering if someone could shed some light on this.

I buy goods from China and my accounting package is Kashflow. There are 2 options for recording no VAT in the purchases section of Kashflow:- 0% VAT or N/A. I have been recording all the transactions from my supplier as N/A, but I have noticed these purchases then don't appear in Box 7 on the VAT return.

I have been paying the VAT when it comes in and recording that as Input VAT in the bank account section of kashflow, that figure then appears in Box 4.

But should purchases from outside the EU appear in Box 7 or not?

Any help is much appreciated.

[Marie Stein]

Hi ADC

I'm not an accountant so am not familiar with teh accounting system you are using but yes, you should include the value of purchases from China in box 7 of the return. See here http://tinyurl.com/n4nfp on the HMRC site - which confirms that box 7 should include any purchases on which you claimed VAT in box 4 of the return.

HMRC don't normally worry too much about the values shown in boxes 6 and 7 or the return if the VAT itself is correct, but have a look at the guidance on the HMRC website about what to do if you make errors on your VAT return.

Their normal practice is that if you didn't include the value of the purchases/imports in box 7 but you did include the VAT in box 4, then it might generate a query from HMRC, if the total input tax in box 4 is higher than the net value of purchases in box 7 and particularly if the return is a repayment claim. You could write to HMRC to explain the reason for the error to minimise any delay in getting the repayment, but otherwise just note the reason in your VAT account.

Hope this helps
Marie

(http://www.vatexchange.co.uk)

[Marie Stein]

Just to add to my post above - see VAT Notice 700/45 "How to correct errors and make adjustments and claims" for details on how to contact HMRC about errors on your returns.
Marie