[UK] How to track VAT on sales and purchases

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[UK] How to track VAT on sales and purchases

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Oseh

Hi all,

Please can I have some help/advice. I am trying to collate my VAT return and it seems to be collating all the VAT transactions which are recoverable but is not collating all the bills that have the 'non recoverable' rate. So effectively my VAT return is wrong as it is not capturing all my expenses!

i.e. When I go to reports and sales tax it shows 0 everywhere except for the recoverable 20% bills which seems to add everything.. please help! There must be something I'm doing wrong

ConnorM

Hey @Oseh! Thanks for reaching out here. If a tax is marked as 'non-recoverable', then that tax would not be pulled into your Reports within Wave. In order to be able to see those tax rates there, they'd need to be listed as recoverable. What I'd recommend doing in order to get some clarity with your particular situation might be to reach out to a local tax professional, and work with them to break down what your best solution here would be.

Oseh

Thanks @ConnorM, I was under the impression that the 'Sales Tax Report' would pull through all bills under each tax category created.. as for a VAT return this information is needed. Purchases containing VAT that we have been charged (at 20%) but cannot claim would still need to be added to box 7 as they are not 'exempt' just non recoverable.

Is there no work around this within the Wave system?

Kind regards
Oseh

EmmaP

Hi @Oseh! This comes down to the bookkeeping of recoverable vs. non recoverable taxes. In the case of non-recoverable taxes, there's really no benefit to the user tracking them on expenses.

Consider a $100 widget expense with 13% HST.

For a recoverable tax this would be book-kept as:
$100 Widget expense
$13 HST expense

In the case of non-recoverable taxes, we roll the tax amount up into the base expense category so it would simply be:
$113 widget expense.

For this reason you don't see the non-recoverable sales tax expense in reports. You would have to change the tax to be marked as 'recoverable'.

For VAT purposes, if you have already read through our Help Center articles and still have questions, as Connor mentioned - it would be best to reach out to a Tax Professional in your area to best advise next steps.

Oseh

Thanks for your response @EmmaP, I understand what you mean - I would have loved it to have the option of pulling through the non-recoverable expenses though just for audit trail and reporting purposes!!

Thanks again for your help

Kind regards
Oseh