> ## Documentation Index > Fetch the complete documentation index at: https://docs.dualentry.com/llms.txt > Use this file to discover all available pages before exploring further. # How to Record Non-Reclaimable VAT > Record VAT you can't reclaim in DualEntry, such as UK business entertaining, with a non-deductible VAT rate that posts the unrecoverable VAT to expense. This guide shows you how to record VAT a supplier charged you that you can't recover, such as VAT on UK business entertaining. DualEntry has no "No VAT" option for this. You record the VAT the supplier charged with a non-deductible copy of the VAT rate, and DualEntry posts the part you can't reclaim to an expense account instead of to input VAT. For how non-deductible rates work, see [Non-reclaimable VAT on purchases](https://docs.dualentry.com/accountants/core-financials/tax-management/non-us-taxes.md#non-reclaimable-vat-on-purchases). ## Prerequisites Confirm the following before you create the rate: * Your company has a VAT nexus for the country, configured under **Configuration → Tax Setup → Nexuses**. * The VAT rates for that country are imported. If **Configuration → Tax Setup → VAT Rates** shows no rates for the country, choose **Import VAT Rates** first. * You know which expense account should carry the unrecoverable VAT, for example your entertainment expense account. It must be an expense or other expense account. * You know how much of the VAT is reclaimable. For UK business entertaining it is usually none, so the **Deductible Percentage** is 0. ## Create a non-deductible VAT rate Create the non-deductible rate as a copy of the rate the supplier charges, so the original rate stays fully recoverable for your other purchases. 1. Go to **Configuration → Tax Setup → VAT Rates**. 2. On the imported rate the supplier charges, for example the UK standard 20% rate, open the three-dot (⋮) menu and choose **Use as Template**. 3. Change the **Name** to something your team will recognize on a bill line, for example "UK Standard 20% Entertaining". Leave **Country**, **Rate Type**, **Tax Type**, and **Rate Percentage** as copied. 4. Turn on **Non-Deductible** and set **Deductible Percentage** to the share you can reclaim, for example 0. 5. Under **GL account mapping**, choose **Edit mapping**, set the **Non-Deductible Cost Account** to your expense account, and save the mapping. 6. Save the rate. After you save, the new rate appears in the VAT Rates list alongside the original. Its name, country, rate type, tax type, percentage, and start date are locked. You can still change **Non-Deductible**, **Deductible Percentage**, the GL account mapping, the end date, and whether the rate is active. ## Use the rate on purchases Select the non-deductible rate on each bill line whose VAT you can't reclaim, and keep the standard rate on every other line. 1. Create or open the bill. 2. On the line for the non-reclaimable cost, select the non-deductible rate as the line's VAT rate. 3. Post the bill. DualEntry splits the VAT on that line by the rate's **Deductible Percentage**. The reclaimable share posts to the **Tax Asset (Recoverable)** account as input VAT, and the rest posts to the **Non-Deductible Cost Account**. With a **Deductible Percentage** of 0, the full VAT amount posts to the expense account. The split applies only to purchases; a sales line using the same rate posts VAT as usual. Direct expenses and vendor credits take the rate the same way as bills. A purchase order shows the VAT but posts nothing to the General Ledger until it becomes a bill. In the VAT return, VAT posted to the **Non-Deductible Cost Account** is classed as non-recoverable and left out of HMRC Box 4, so it does not reduce the VAT you pay. ## Troubleshooting These are the usual reasons a non-deductible rate can't be set up or doesn't post the way you expect. * **Non-Deductible is grayed out.** The rate is 0%. A 0% rate charges no VAT to split, so the switch only enables on rates above 0%. * **Saving fails with "Non-deductible VAT cannot be enabled on zero rated, exempt, or out of scope rates".** The rate's **Tax Type** is **Zero Rated**, **Exempt**, or **Out Of Scope**. Copy a rate with the **Input/Output** tax type instead. * **Your expense account isn't in the Non-Deductible Cost Account list.** The list shows only active expense and other expense accounts. Use one of those account types. * **The unrecoverable VAT posted to the line's expense account instead.** The rate has no **Non-Deductible Cost Account**, so DualEntry posts that share to each line's own account. Set the account on the rate under **GL account mapping**. * **Every purchase at 20% became non-reclaimable.** **Non-Deductible** was turned on for the shared imported rate instead of a copy. Turn it off on the imported rate and create a separate copy as described above. ## Related * [Non-US Taxes](https://docs.dualentry.com/accountants/core-financials/tax-management/non-us-taxes.md) for VAT rate setup, 0% treatment rates, and reverse charge. * [Bill management](https://docs.dualentry.com/accountants/core-financials/accounts-payable/bill-management.md) for entering and posting bills. * [Tax Management](./index) for how tax posts to the General Ledger. This documentation is built and hosted on [Mintlify](https://mintlify.com), a developer documentation platform.