Table of contents

 

1. Introduction

2. UK imports and exports toggle

2.1 Exports

2.1.1 Standard Scheme

2.1.2 Flat Rate Scheme

2.2 Imports

2.2.2 Standard Scheme

2.2.3 Flat Rate Scheme

2.3 Postponed VAT Accounting

2.4 Import VAT Paid upfront

3. EC Sales List

3.1 Submit an EC sales list to HMRC

3.2 Create an EC sales list

3.3 EC Sales List submissions

4. VAT MOSS

4.1 How to create a customer enabled for VAT MOSS

4.2 How to edit a customer for VAT MOSS

4.3 How to create an invoice with VAT MOSS applied

4.4 How to create a VAT Moss report

5. HMRC References

5.1 VAT Return

5.2 Services

5.3 Goods

5.4 Goods from NI


1. Introduction

 

If you import/export goods or services into or out of the UK, or use the VAT Mini One Stop Shop you can use our ‘Global imports and exports VAT treatments’ feature. This feature will enable you to add a VAT treatment on invoices and bills so that they are picked up by the VAT return in the correct boxes. In the case of VAT MOSS, you will be able to add a VAT treatment on invoices and bills so that they are picked up on a dedicated report.


2. UK imports and exports toggle

 

Navigate to Settings > Configure system > Toggle features > VAT & bank import tool and enable the ‘Global imports and exports VAT treatments’ feature.

 

If you are based in Northern Ireland and import/export to EU member states then please also enable the ‘Northern Ireland imports & exports to EU’ sub-option.

 

For reference: HMRC's guide on how to fill in and submit your VAT Return (VAT Notice 700/12)

 


2.1 Exports

 

When you create a sales invoice on the Sales > Invoices menu, you will now be provided with a VAT treatment field which will provide several options. These options are explored below for each VAT scheme i.e the table will show the VAT rates that will be available when you select a VAT treatment and the boxes on the VAT return each invoice will then appear under.


2.1.1 Standard Scheme

 

VAT Treatment Name

VAT Rates applicable

VAT return boxes the invoice appears on

Goods or services (UK VAT)

All

Box 1 and 6

Services Exported 

0%

Box 1 and 6

Services to EU Customer (Pre-Brexit) B2B

All*

Box 1 and 6

Services to EU Customer (Pre-Brexit) B2B

All*

Box 1 and 6

Goods from NI to EU Customer

0%

Box 1, 6 and 8

Goods Exported

0%

Box 1 and 6

*The system will throw an error unless you choose a 0% or manual rate


2.1.2 Flat Rate Scheme

 

VAT Treatment Name

VAT Rates applicable

VAT return boxes the invoice appears on

Goods or services (UK VAT)

All

Box 6

Services to EU Customer (Pre-Brexit) 

0%

Excluded

Goods from NI to EU Customer

0%

Box 6 & 8

Goods Exported

0%

Box 6

Goods from NI to EU Customer


0%Box 6 & 8


2.2 Imports

 

When you create a bill on the Purchases > Bills menu, you will now be provided with a VAT treatment field which will provide several options. These options are explored below for each VAT scheme i.e the table will show the VAT rates that will be available when you select a VAT treatment and the boxes on the VAT return each invoice will then appear under.


 

2.2.2 Standard Scheme

 

VAT Treatment Name

VAT Rates applicable

VAT return boxes the bill appears on

Goods or services (UK VAT)

All

Box 4 and 7

Services Imported - Reverse Charge

0%

Box 1, 4, 6 & 7

 

Services from EU Supplier (Pre-Brexit)

All*

Box 1, 4, 6 & 7

 

Goods to NI from EU Supplier

0%

Box 2, 4, 7 & 9

Goods from EU Supplier (Pre-Brexit)

All*

Box 2, 4, 7 & 9

Goods Imported

0%

Box 4 and 7

Goods Imported - Postponed VAT Accounting

0%

Box 1, 4 and 7

*The system will throw an error unless you choose a 0% or manual rate

 

Cash Accounting on imports is not permitted by HMRC. If you are on a standard cash accounting scheme, we will include imported bills on the VAT return based on the accrual date (invoice date) and not the payment date.

2.2.3 Flat Rate Scheme

 

VAT Treatment Name

VAT Rates applicable

VAT return boxes the bill appears on

Goods or services (UK VAT)

All

Box 4* 

Services Imported - Reverse Charge

0%

 

Boxes 1, 4, 6 & 7

Services from EU Supplier (Pre-Brexit)

0%

Boxes 1, 4, 6 & 7

Goods from EU Supplier (Pre-Brexit)

0%, Manual

 

Boxes 2, 7 & 9

Goods Imported - Postponed VAT Accounting

0%

Boxes 1, 4* & 7

*if fixed asset account code used on bill over £2000

 

2.3 Postponed VAT Accounting

 

If you import goods and agree to use the postponed VAT accounting method with your supplier or freight agent, you can declare and recover import VAT on the same VAT Return, rather than having to pay it upfront and recover it later.

 

For reference: HMRC's guide when you can account for postponed VAT accounting on your VAT 

2.4 Import VAT Paid upfront

 

If you are unable to use the postponed VAT accounting method and receive an invoice from the freight agent with the recharged VAT, you can account for this by doing the following:

 

  • Create the bill from the supplier [Let's identify this as Bill 1] and choose the VAT treatment ‘Goods imported’ also select the VAT rate as 0%
  • Create the bill from the freight agent [Let's identify this as Bill 2] and create a line for the recharged VAT with ‘100%’ VAT i.e select ‘Manual’ as the VAT rate and enter the full amount in the manual VAT box
  • The VAT return will show Bill 1 in boxes 4 (zero value) and 7 (net value of goods imported)
  • The VAT return will show Bill 2 in boxes 4 (total amount of import VAT) and box 7 (0 value)

 

The two bills combined will give the correct amounts on the VAT return allowing you to reclaim the import tax incurred.


3. EC Sales List

 

If you’re a VAT-registered business in the UK supplying goods from Northern Ireland to VAT-registered customers in an EU country, you must submit an EC sales list informing HMRC of these supplies.

 

For reference: HMRC's guide on the EC Sales List

 

The EC sales list is populated automatically if you use the ‘Goods from NI to EU Customer’ VAT treatment. You can access this on the Tax > VAT > EC Sales List menu. This will only be visible if you have the ‘Northern Ireland imports & exports to EU’ sub-option toggled on.


3.1 Submit an EC sales list to HMRC

 

To be able to submit an EC Sales List via Clear Books, you must make sure you have authorised Clear Books as an agent for EC sales in the HMRC Tax Services system.

 

Additionally, you must make sure that your VAT number and the postcode for your registered address in your Clear Books settings match the data HMRC have on record for you in the HMRC Tax Services system.

 

Appointing Clear Books as your EC Sales Agent

 

Clear Books is a registered VAT Agent, which allows us to submit EC Sales Lists on behalf of other companies. In order to give us permission to submit returns for you, you need to appoint us as an agent. This can be done as follows:

 

Please note that some steps in the HMRC services account below may change as HMRC develop their system

 

  • Click Add Agent.
  • Enter our Agent ID: clearbooks-MKSMH2GFG21S

 

Setting up Clear Books

 

The postcode of your registered address in Clear Books must match the postcode you have registered with HMRC in their Tax services system. This is an HMRC requirement, the submission will be rejected if there is a mismatch.

 

To update the postcode of your registered address in Clear Books, head to the Settings > Organisation > Details & Tax > Contact Details menu.

 

 

Another HMRC requirement is to use the correct VAT number. This can be updated on the Settings > Organisation > Details & Tax > Tax menu.

 

 

Your customers must be updated with both the appropriate country and VAT number. You can edit or create new customers on the Contacts > Customers menu.

 

The country is updated on the ‘Invoice address’ tab and the VAT number is updated on the ‘Other information’ tab.

 


3.2 Create an EC sales list


To generate an EC sales list head to the Tax > VAT > EC Sales List, here you can select a quarter or month.

 

 

The report will then pull through all relevant EU customers, displaying their country and VAT number as well as the details of the goods supplied.

 

To submit the return just click on the Submit to HMRC button.

 


3.3 EC Sales List submissions

 

All EC sales list submissions will be listed on the Tax > VAT > EC Sales submissions menu.

The report will identify which submissions have been successful and any that have failed.

 

4. VAT MOSS

 

You cannot use VAT MOSS in the UK for sales made from 1 January 2021 onwards, however, you can still register for the non-Union VAT MOSS scheme in an EU member state or register for VAT in each EU member state where you supply digital services to consumers.

 

For reference: HMRC's guide VAT rules for supplies of digital services to consumers

 

Our VAT MOSS feature allows you to create invoices using the VAT rates of an EU member state. First you will need to make sure the contact has the appropriate invoice address and secondly you will need to select the ‘Digital Services to EU Customer’ on the invoice. You can generate a report which will show all invoices with the ‘Digital Services to EU Customer’ VAT treatment.


4.1 How to create a customer enabled for VAT MOSS


Navigate to Contacts > Customers and click on the Add Customer button

 

Fill out the basic information and then click on the Invoice address tab on the left.

 

Head to the Invoice address tab details making sure to set the specific country. Hit the Save button to complete.

 

This will now allow you to charge the appropriate VAT rates when creating a VAT MOSS invoice.


4.2 How to edit a customer for VAT MOSS

 

Navigate to Contacts > Customers and click on the Edit Contact link for the appropriate customer.

 

 

Click on the ‘Invoice address’ tab on the left and update the details making sure to set the specific country. 

 

This will now allow you to charge the appropriate VAT rates when creating a VAT MOSS invoice.

 

Hit the Save button to complete.


4.3 How to create an invoice with VAT MOSS applied

 

Navigate to Sales > Invoices and create a new invoice.

 

Fill in the invoice details for a VAT MOSS enabled customer. In the VAT treatment box select Digital Services to EU Customer. The VAT rate dropdown list will populate with all the VAT treatments specific to the customer's location.


4.4 How to create a VAT Moss report


Navigate to Reports > All reports and click on the ‘VAT Moss’ report listed under the ‘Tax’ heading.

 

 

 

You can now generate a VAT MOSS report by selecting the appropriate quarter and hitting the ‘Search for invoices’ button.

 

The dates of the quarters listed are aligned with the HMRC tax year and the number of quarters shown is based on the financial reporting periods you have created on the Settings > Accounting > Periods.  

 


5. HMRC References

The HMRC documentation helps explain in more detail the rules behind imports and exports. 


5.1 VAT Return

How to fill in and submit your VAT Return (VAT Notice 700/12)

Complete your VAT Return to account for import VAT

5.2 Services

Place of supply of services (VAT Notice 741A)

Work out your place of supply of services for VAT rules

Reverse charge

5.3 Goods

Goods exported from the UK from 1 January 2021 (VAT Notice 703)

Imported goods: accounting for import VAT

Paying VAT on imports from outside the UK to Great Britain and from outside the EU to Northern Ireland

5.4 Goods from NI

VAT on movements of goods between Northern Ireland and the EU