How to enter transactions with multiple VAT rates
You may have a purchase or sale where some items have one rate of VAT and other items have a different rate of VAT.
For example, you may have an invoice like the one below that charges 20% for software, and 0% for training on the software:
| Product | Nett | VAT Rate | VAT | Gross |
|---|---|---|---|---|
| Software | 300 | 20% | 60 | 360 |
| Training | 150 | 0% | 0 | 150 |
| Totals | 450 | 60 | 510 |
When you enter this purchase into Bookkeeping Today you can only use one VAT rate, so what do you do?
The important thing is that the Gross, Nett and VAT amount are correct. These numbers record the actual amount of money involved in the transaction, so they must be accurate. The VAT Rate is not used in your VAT Return and won't be used in your tax returns, so it's much less important.
With that in mind you can enter this purchase like this:
| VAT Rate | 20 |
| Gross | 510 |
| Nett | 450 |
| VAT | 60 |
| Note | Invoice 1234 |
An alternative method
The above method is fine but it doesn't show that two VAT rates were on the original invoice. If it's important to you to have that information you can split the purchase into two records like this:
| VAT Rate | 20 |
| Gross | 360 |
| Nett | 300 |
| VAT | 60 |
| Note | Invoice 1234 |
| VAT Rate | 0 |
| Gross | 150 |
| Nett | 150 |
| VAT | 0 |
| Note | Invoice 1234 |
The downside of this method is that the transaction will be harder to find in the purchase or sales list because you won't have one transaction showing the total Gross price.