VAT collected in designated VAT exempt free zone
We have charged and collected VAT from a customer who is in designated VAT exempt free zone. How do we correct it - show the invoice under Standard Rated Supplies and pay?
If you have charged VAT on a supply within a Designated Zone and the supply would be out of scope subject to satisfying the conditions, then you have incorrectly charged VAT on the supply. You need to issue a tax credit note to reverse the incorrect VAT charged to the customer. Further please ensure the supply was indeed out of scope, prior to issuing a tax credit note. Note that the location of your customer in a Designated Zone alone does not make the supply out of scope as it needs to satisfy conditions as per Art 51 of ER as well0 Like
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