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bigduckontax
bigduckontax, Accountant
Category: Tax
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Experience:  FCCA FCMA CGMA ACIS
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I need help to calculate the Vat Return. I don't know exactly

Customer Question

I need help to calculate the Vat Return.
I don`t know exactly what purchases should I include in box 7.
There are some expenses except from Vat like:
- MOT,
- truck insurance,
- vehicle license,
- road tax,
- bank fee,
- penalty charge.
Should I calculate and add the total to other purchases non excepted from Vat or not?
Also, some times I`m buying diesel from EU.
I have the receipts, but if I`m going to calculate the exchanges rate using the HMRC monthly rate is going to be different than the amount the bank is charging me.
Again, should I use the amount shows in the bank statement or calculate the exchange rate and where to put, Box 7 or Box 9?
And there is an also a fee that the bank is charging me for any transaction in different currency. Should I calculate the total fee and add the amount in box 7?
Thank you.
Submitted: 2 years ago.
Category: Tax
Expert:  bigduckontax replied 2 years ago.
Hello, I'm Keith and happy to help you with your question.
I have always included these items in the Box 7 totals ever since the tax was introduced in the early 70s and no VAT official has ever batted as much as an eyelid. You are always advised to use the HMRC monthly exchange rate for transactions, Any discrepancy between the bank and the HMRC rate is merely an overhead expense or credit in your trading [technically a 'Gain or Loss on Exchange in your books of account].
Box 7, to be frank, is merely a statistical exercise although if the total therein does not match or cover the VAT reclaim in Box 4 then there may well be an enquiry from your local VAT office.
I do hope i have helped you ith your question on the completion of the VAT 100 Form.
Customer: replied 2 years ago.

Hi Keith,

Thank you for your answer.

Have to be sure I understand well.

So, you advise me to include all the other cost in Box 7, whatever some of purchases are Vat excepted or not?

Secondly, I should use the HMRC monthly exchange rate for transactions.

The difference between HMRC exchange rate and the amount shows in the bank statements and the additional fee for non sterling transaction I will add in box?

And about you saying at the end regarding the check that it may be possible to have from the VAT office, is it not normal to have zero rate or excepted VAT purchases?

Thank you

Expert:  bigduckontax replied 2 years ago.
You are correct in your interpretation of my advice.
Always use the HMRC monthly exchange rate.
The difference goes in Box 7. These are either zero rated or exempt so there is no VAT to reclaim.
My caution was to cover say, you reclaimed 25 quid of VAT yet the Total Value of purchases was 80; clearly a discrepancy here as I am sure you will agree. Someone in the VAT Office might pick up on this. In any reality Box 7 entries are invariably adequate to recover reclaimed VAT.
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