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VAT on Freight, applying to voucher relating to purchase order.
Maybe if I explain the sequence of events it will be understandable.
I have set up for UK VAT as per the guidance in this forum, for which I am most appreciative. This includes a special tax assignment of 'UK Freight' at standard rate, 17.5%.
However, when I issue a purchase order I often don't know how much the vendor will charge for freight. So when their invoice comes in and includes a freight charge it will be included in their VAT calculation. I then create a voucher for this purchase order, using the 'apply to line item' button I can enter a value for freight charges. All well and good but this isn't then assessed for VAT.
For example, I order goods for £100 and the invoice comes in and I have been charged £10 freight. This results in a total for the voucher of £117.50 + £11.75 = £129.25
I distribute the voucher amount, using the button and enter £10 for the line item freight. This then leaves an undistributed amount of £1.75 and the total VAT of £17.50 instead of £19.25. I have been dealing with this by adding a miscellaneous distribution of the VAT on freight, in this case £1.75 as Tax-VAT Standard Rate, and hoping that this shows on the correct side of the balance sheet, technically I am owed this money by HMRC, when I do my VAT return it should show as an amount to offset my liability to them on sales.
My question is, if I have set everything up correctly using the special UK Freight tax assignment, why is this not then taken into account at the vouchering? I can't go back and change the PO at this point as I will have had to post it in order to be able to receive the goods and voucher it.