I have a customer where most of their purchase VAT is non-recoverable because most of their sales are zero rated. Where their purchases are non-recoverable they need the full gross invoice amount to be posted to the P&L account, however we also need to have the split of goods/VAT available to report so they can report to HMRC the value of VAT on overhead related activities as they are able to reclaim a portion of these. I’ve been looking at this but I cannot see how the VAT setup for this can be achieved in NAV. It’s almost a new ‘VAT Calculation Type’. Other systems have a feature for this.
Sales are business to customer (for example) where is customer is VAT exempt (eg is registered disabled and purchasing a mobility scooter)
Your purchases are business to business so you are not VAT exempt so pay the variable rate of VAT on your purchases?
This is Item dependant?
You can set up the posting gl accounts appropriately from the Gen. Product Posting Groups setup, assigning those items with a zero rate of vat…
For the overheads eg a carriage invoice, you can post this as a Purchase Invoice directly, but use the charge on items to aportion the cost appropriately to the original warehouse receipte generated from the purchase order.
Thanks for the replies. Our client’s main revenue is residential rent which is exempt from VAT in the UK. This means that no VAT is raised on their sales, other than some fees for heating charges made. This means the company cannot reclaim all the VAT on their purchases. They cannot reclaim any purchase VAT on direct costs, but can reclaim a portion of the VAT on overhead expenses. We can identify which purchases they can reclaim by G/L account. They can reclaim 16% of the 20% VAT paid on overhead expenses. For example :
I have since found that the Italian version of NAV has extended VAT features to do exactly this and it works perfectly. So frustrating that the GB version doesn’t have this functionality as there are many companies in the UK with this scenario. I’ve started looking at what would be involved in migrating the code out of the IT version into the GB version, but as you can imagine the posting code for VAT is everywhere!
I was hoping to find a clever workaround in the GB version …
Thanks for the suggestion. The 16.80 does need to go to the same expense G/L account so this would work. It would mean the user has to enter all the invoices as gross (VAT inclusive) amounts, but I guess they could get used to that. The only problem is that they still really need to produce a report for the VAT authorities to show the invoices accounted for, this would need to show the tax calculated at 20%, i.e. 100.00 + 20.00 = 120.00.
In that case I would really incorporate the ITA objects to perform the necessary action on a correct base.
And I do not think that it will take you much more than a few tables (maybe just one) and forms and CU 12 to apply these changes to make the posting work.
If you want to show the correct information in let’s say the statistics as well, you might need to apply changes to 37/39 as well.
I had exactly the same requirement once, when purchase VAT is partially non-refundable (or non-recoverable as you call it). The schema was even more complex than yours, as splitting percentages changed in range from 0% to 100% 1) depending on cost centers 2) goods/services purchased.
You have 2 options
do everything during PO/PI posting
post normally (all VAT refundable), later, ay, once a month, a BatchJob is run which fills a G/L Journal crediting the required % from Purchase VAT to some Expense Acc.
First one requires serious coding (changes in CU12 are NOT welcome and are applied only if you do not have another method), plus, this approach is less flexible if you need to change something later. Plus, it is substantially more expensive.
Second one gives you more flexibility - before posting the Journal you can revise it, check what actually is going to be posted and delete unwanted entries. In this case only one Report object and (some) Table(s) for % setup conditions etc is needed, you do not need to mess with CU12.
We went the second way, it works OK. As you may understand, I can’t share here or privately the code/algorithm, as I do not own the rights to it. I gave you the idea, implementation is upon you… [:)]
updated:
approach fulfills your requirement to see original Cost/VAT amounts for reporting to HMRC and how much of that VAT has been written to expenses.