Guide

Foreign currency transactions and VAT

Introduction

You can buy and sell in any currency, but when you keep your VAT accounts, amounts in foreign currencies must be converted into sterling. Invoices must always show sterling figures for the net totals and VAT for each VAT rate, even if they also show foreign currency figures.

There are two standard ways you carry out the conversion to sterling. However, you may apply to use a different method if you would prefer. This guide explains what the different methods are and how you should carry out conversions.

If you are using the Tour Operators' Margin Scheme, the conversion process is slightly different.