- The first purchase (Fred's Ginger Supplies) is made using a Non-EC VAT code "S," rated at 17.5%.
The "Total" and "Less EC Purchase VAT" lines in the first purchase have the same amounts. This is because the "S" VAT code was defined as Non-EC; therefore, there are no EC Purchase VAT amounts affecting this total.
- The second purchase (Bonjour Fournisseur) is made using an EC Purchase VAT code "G." This code was created with an EC Reported Rate of 17.5%.
The VAT amounts on the second transaction have asterisks beside them to indicate that they are notional VAT amounts, i.e. they only exist for the VAT report, and are calculated at the EC Reported Rate for this VAT code.
Note that VAT on the second purchase in the above example appears in both VAT Collected and VAT Paid columns. The two notional amounts of £35 should cancel each other out on the VAT 100 form.
The 'Less EC Purchase VAT' line below each VAT code's total subtracts all of the notional entries created by EC Purchases from the totals, leaving you with the amounts you are actually due to pay. After all, you don't have to pay these amounts - only account for them when reporting VAT to Customs & Excise.