When to use "No VAT" in Xero

[@markbusby1446]

Thanks for staying up and doing this in your jammies!

[@XUSolutions]

Any time!

[@ninagray222]

Hi Marion, I've accidentally been adding the VAT that I've seen on transactions and putting it on the reconciled transactions. We are not yet VAT registered so I need to change all VAT transactions to No VAT. What is the quickest way for me to do this? When I try to edit a reconciled transaction it doesn't let me adjust the VAT and I don't want to redo each one as I'll lose all of the attachments I've spent ages finding, scanning and attaching. I'm really hoping there's a very quick fix, any help is much appreciated.

[@XUSolutions]

Good news, there is. Find and Recode is what you want - check out my video if you’re unsure about it

[@johnnycheng4264]

Hi Marion, for invoices to clients who are overseas i.e. Spain, Australia etc...I have been using "NO VAT" but I have since understood that it should be "Out of Scope" and the sales figure should be in box6 of the return. The "NO VAT" does not include in box6? Xero does not however have that VAT rate option? One suggestion was to create a new rate name it "Out of Scope" and mimic the "Zero rated" rate - this would ensure the sales figure is shown in box 6. Is this correct?? Many Thanks!!

[@XUSolutions]

I would just use ‘zero rated’ which puts the amounts in the right boxes.

[@johnnycheng4264]

@@XUSolutions Thanks Marion, for ones that I have already done say (Oct-Dec21 qtr), which I have not submitted return yet but the invoices have already been sent to the client. Do I adjust these rates to Zero rated in Xero? Please advise - Many Thanks

[@XUSolutions]

@@johnnycheng4264 yes that's what I would do.

[@karteekk6905]

Nice video. Is bank charges are "no vat" or "exempt" ?

[@XUSolutions]

Bank charges are normally exempt, but if in doubt check with your bank. It depends on what the charges are exactly for. But they will not be "no VAT"

[@karteekk6905]

@@XUSolutions ok thanks for clarification. The way you explain in your videos is really awesome.

[@karteekk6905]

If possible please make some video on finalization of accounts in Xero.

[@XUSolutions]

maybe someday

[@malinimccauley501]

Hi . On an overseas business trip in europe, if I purchase food and pay hotel bills etc, when filling out the expenses form in Xero are these outside the scope so 'NO VAT' in Xero or should they be zero rated expenses so the amount goes into box 7 of VAT return?

[@XUSolutions]

Use zero rated

[@iserveumesh8461]

We are into travel business we book flight tickets so can we make purchase and sales invoice under NO VAT, at the time of filing the VAT it does not show amount in purchase and sales but if we make purchase and sales in zero rates amount reflects in purchase and sales column. So which is the correct way?

[@XUSolutions]

Flights are zero rated for VAT

[@iserveumesh8461]

The bank charges which are debited from account can we do reconciliation into direct expense account?

[@XUSolutions]

There is a code for bank charges

[@toniluong9311]

If business is not VAT registered, and purchases charge VAT how do you treat them in Xero?

[@XUSolutions]

Hi, can you clarify - is the business you are entering the transactions for the one that is not VAT registered. Or are you still referring to the supplier?

[@toniluong9311]

@@XUSolutions The business is not VAT registered but the purchases charge VAT - so I presume for purchases on fixed assets you depreciate on the gross amount? Thanks!

[@toniluong9311]

It is the business I am entering the transactions for which is not VAT registered.

[@XUSolutions]

If you are not VAT registered, then make sure that is showing in your financial settings. Then for all purchases, you simply ignore the VAT amount - the 'tax rate' will always be 'No VAT' and the cost to your business will be the full amount including any VAT

[@iserveumesh8461]

We have received a refund from HMRC VAT refund how to do reconciliation? Can we do reconciliation under 820 VAT account in liabilities.

[@XUSolutions]

Yes, code it here