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VAT posted in wrong currency

I buy goods from Europe to sell in the UK. I buy and sell in Euros and I was told (wrongly) that it wasn't possible to invoice somebody for VAT in Euros. Therefore if I sold them Euros10000 of goods I would calculate what that was in sterling and then make a separate VAT invoice in sterling. This worked fine before I put the accounts on QB, as people would make two payments - one in Euros for the goods and one in sterling for the VAT.

I know for the future that I can invoice somebody in Euros for VAT so that isn't a problem...

The problem comes when I'm backdating the accounts:

a) If I record a sale in Euros as having no (Euro) VAT then how do I account for the VAT? b) If I record the sale as including Euro VAT then how can I receive payment in Euros and sterling (which is how I've been paid)?

Would appreciate your help

Peter

Reply to
plbrown
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It still has VAT. It's just calculated in sterling. Convert everything into sterling and prepare the VAT return using the sterling amounts. You don't account for anything separately depending on the currency.

How can you receive payment? However they pay you!

There's no problem with any of the above. VAT returns are in sterling. Bank accounts are in a particular currency. Accounting records are in sterling. You just calculate the conversion whenever you need to.

Reply to
Peter Saxton

Not sure if this post has gone through (my laptop crashed just as I pressed send). If I invoice somebody in euros and sterling, then they'll pay me in euros and sterling. However, when I record the invoice in QB I can only do it in euros, the euro receipt will therefore pay for the goods, but how do i clear the remaining euro VAT when I receive the money in sterling? Can you clear a euro total from a sterling account?

Reply to
plbrown

Have you set up your accounts in Euros?

Reply to
Peter Saxton

If I check the customer list then each customer has a currency assigned. If I try to invoice in another currency then I get an error message. Does this mean that my QB is not set up correctly?

Reply to
plbrown

Historians believe that in newspost on Tue, 13 Mar

2007, plbrown penned the following literary masterpiece:

No it means each customer can only be created with one currency.

Create the same customer but put say (VAT) on the end of their customer name. Assign the correct second currency for that customer.

Invoice Customer in Euros for the goods and Customer (VAT) in sterling for the VAT element. Just don't get the currency conversion on the VAT wrong else HM Customs and Excise will not be happy with you at your next VAT inspection!

Even simpler. Get the Customer's EU VAT no. and then you assign the goods the ES VAT code and never need to charge VAT - see the QB help file on how to do it - in mine under EC VAT codes). Same for buying from the EU. Give the supplier your VAT no. (assuming they are VAT registered) and you will avoid being charged for VAT element.

Duncan

Reply to
Duncan Clark

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