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Posted by OrkneyTech

VAT incorrect

Good afternoon all,

I hope that I can describe my issue without boring you. It is a bit tedious but in essence my VAT is not showing correctly on my invoices.

The problem is that I do not want VAT applied to the total cost of my products. So to explain fully here goes.

I buy items from non-VAT registered companies and private individuals where there is no VAT on the purchase but because I am VAT registered there is VAT on the final sale. This means that VAT is only applied to the difference between the sale price and the purchase price. My problem is that Easify does not seem able to show this. Does anyone know a way to do this in Easify or if there is a workaround?

For example I buy a product for £20 sell it for £30 so there is only VAT charged on £10 and not the total £30 but Easify shows either no VAT or VAT on the total £30.

Please help this is driving me up the wall.... 

Thanks in advance, Kerry

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Posted by Richard

Re: VAT incorrect

OrkneyTech said:

Good afternoon all,

I hope that I can describe my issue without boring you. It is a bit tedious but in essence my VAT is not showing correctly on my invoices.

The problem is that I do not want VAT applied to the total cost of my products. So to explain fully here goes.

I buy items from non-VAT registered companies and private individuals where there is no VAT on the purchase but because I am VAT registered there is VAT on the final sale. This means that VAT is only applied to the difference between the sale price and the purchase price. My problem is that Easify does not seem able to show this. Does anyone know a way to do this in Easify or if there is a workaround?

For example I buy a product for £20 sell it for £30 so there is only VAT charged on £10 and not the total £30 but Easify shows either no VAT or VAT on the total £30.

Please help this is driving me up the wall.... 

Thanks in advance, Kerry

Hi Kerry,

What you're describing sounds like "Second Hand VAT Rules".

I'm no tax expert, but if you are buying goods from non VAT registered companies, you will still need to charge the relevant rate of VAT on your full retail price and not just the margin. In which case Easify is calculating VAT as expected.

If you are selling second hand goods then you can just charge VAT on the margin (profit - cost price).

Easify doesn't support second hand VAT rules (yet), but you can achieve this if you always sell at the same margin by setting up a separate "Second Hand VAT" rate that apportions VAT only for the margin.

It is probably best to have a chat with your accountant, or get in touch with HMRC to clarify this.

HTH  

Regards - Richard (Easify Developer)

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Posted by OrkneyTech

Re: VAT incorrect

Thanks for the reply Richard and you are correct about the Second Hand VAT. My accountant explained this at the time of becoming VAT registered and that I should only pay VAT on the profit made on any sale when there is no VAT on the purchase price.

So my question is now how do I go about setting the Second Hand VAT rate within Easify, ie applying it to the margin only?

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Posted by Richard

Re: VAT incorrect

Sorry for the delay getting back to you Kerry...

Easify doesn't support second hand VAT rules (yet), but you can achieve this if you always sell at the same margin by setting up a separate "Second Hand VAT" rate that apportions VAT only for the margin.

Other than that you'd need to have a separate VAT rate for each product that's sold at a different margin.

Regards - Richard (Easify Developer)

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Posted by OrkneyTech

Re: VAT incorrect

Richard said:

Sorry for the delay getting back to you Kerry...

Easify doesn't support second hand VAT rules (yet), but you can achieve this if you always sell at the same margin by setting up a separate "Second Hand VAT" rate that apportions VAT only for the margin.

Other than that you'd need to have a separate VAT rate for each product that's sold at a different margin.

Sorry I maybe didn't make myself clear but I do not know how to do this within Easify "setting up a separate "Second Hand VAT" rate that apportions VAT only for the margin". I was just asking for the method more than the answer.

What I am unable to do is tell it to apply 20% VAT to the Margin only and not the Full Price.

Could you help me through the steps to set it up please?

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