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VT Transaction+

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Purchase of goods from the EU to Northern Ireland

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The following information is for general guidance only and should not be taken as definitive VAT advice, since individual circumstances may vary. To determine the VAT treatment for your particular transactions please refer to HMRC guidance or seek tax advice from an accountant.

Accounting for VAT on purchases of goods from the EU to Northern Ireland (acquisitions tax)

(Note: If you are on the cash accounting scheme for VAT, you cannot account for acquisitions tax in VT Transaction+ - see below).

Firstly, change the VAT status for your business by selecting Set Up>VAT and ticking the Business is situated in Northern Ireland or the EU box.

Acquisitions tax is the VAT due on the purchase of goods (but not services) from suppliers in other European Union countries. This is accounted for by the purchaser rather than the supplier. Acquisitions tax is reported on Box 2. of the VAT return. You are also required to report the net value of these goods on Box 9. of your VAT return (as well as Box 7.).

To account for acquisitions tax in VT Transaction+, select the Purchases of goods from the EU option when entering purchases:

PAY and CHQ payment dialogs (if suppliers ledger not used)*

Tick the Purchase of goods from the EU box at the bottom left of the dialog

PIN - Purchase invoice dialog

In the Type of purchase (for VAT purposes) drop down list at the bottom of the dialog select the Purchase of goods from the EU item

*Please note that this option in not available in the Payments And Receipts dialog.

When you select the EU option in the above dialogs, an EC VAT payable box appears. You should record the acquisitions tax in this box at the appropriate VAT rate. This will ensure that this figure in included in Box 2. when you run the VAT return.

Assuming you can fully recover VAT on purchases, you should enter the same amount in the Input VAT box. This will ensure that this figure is included in Box 4. when you run the VAT return.

In the Net field, enter the net value of the purchase. The Total field should automatically update with the same value, assuming you can fully recover input VAT.

6_purchaseEC

Screenshot of a section of the PAY, CHQ and PIN dialogs when the Purchase of goods from the EU box is ticked

Completing your VAT Return

When the VAT return is run, the appropriate boxes will be populated with the required values from the example in the screenshot above i.e.:

VAT return element

Included in VAT return

Amounts included £

EC VAT payable

Box 2

20.00

Input VAT reclaimable

Box 4

20.00

Net value of purchase

Box 7

100.00

Net value of purchase

Box 9

100.00

If you are on the cash accounting VAT scheme

According to HMRC guidance, 'businesses cannot use the (cash accounting) scheme for goods...that they import of acquire from a business registered in another EC country'.  

If imports cannot be accounted for using cash accounting, they must be accounted for using the standard method of VAT accounting (i.e. at the time of the invoice, rather than the time of payment).

If the VAT cash accounting setting is turned on in VT Transaction+ this does not allow acquisitions tax to be accounted for using the standard method of VAT accounting.