I often hear shouted from another room a question along the lines of “Is it No VAT if I’m doing a PO for someone who’s not VAT registered”, usually signifying my Husband is working from home and has forgotten the difference between 0% & No VAT entries on QuickBooks. He’s probably not alone, as they produce the same result for him when using either when raising a PO or processing his expenses, but they do make a difference further down the line, as using the wrong one can make things appear on a VAT return when they shouldn’t or the opposite, so it is important to get it right! Plus it makes life easier for your bookkeeper if you get it right first time, which will keep them happy!
Essentially, 0% is for zero rated items like most food & postage, plus suppliers that could charge VAT on their services if they were VAT registered, but currently aren’t. No VAT is for tax payments & wages. Simple as that. And now I’ve written this blog my husband can look at this rather than shouting through the house for help!