Should Bank Charges Be Included in VAT Return in UK? How to Enter Bills for Reverse Charge?

Should Bank Charges Be Included in VAT Return in UK? How to Enter Bills for Reverse Charge?

Hi Zoho Team,
I've just moved to Zoho books recently. Everything works till i started to prepare for my VAT return. 

1. Bank charges in VAT return
I'm in the UK. I am quite sure ordinary bank charges are VAT exempt. 
My understanding is derived from government document VAT Notice 701/49: finance - GOV.UK (www.gov.uk)

VAT Notice 701/49: finance




But Zoho has included my bank charges in VAT return, because on the chart of accounts, Bank Fees and Charges are pre-determined by Zoho system to be included (marked in red in screenshot). 



I don't know what to do to make bank charges go off my VAT return. Are there any way to go around this problem?


2. Reverse charge for purchases from outside UK
As a UK business, I have purchased service from a German vendor.  The vendor sent me a bill without charging me VAT. 
Following Zoho's guidance on this (see screenshot below), the service I purchased will/should be handled as Revere Charge.




What confused me is how I should enter this bill for this German vendor. Below is the screenshot for it. 
I've already defined this vendor as vendor located in Germany. But under Vendor name, I was asked what VAT treatment to apply. Anyway, I chose Overseas. Then down below, in item details, I chose "STANDARD RATE 20%". 
Is this the correct way to enter this bill? Or is it even correct to handle this bill as Reverse Charge? Are there manual journal entries required for reverse charge?  
Please advise. 
Many thanks!


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