What is the correct VAT for non VAT registered suppliers on Xero?
There is not a completely accurate VAT setting for non VAT registered suppliers in the templated VAT rates provided. For complete accuracy of the VAT return, a VAT rate that includes the purchase in Box 7 of the VAT Return (Total of Expenditure) without adding to Box 4 (Total of VAT Reclaimed) is needed.
The closest Xero gives us is Zero Rated Expenses. Although this is designed for supply of Zero Rated goods (eg food) the effect on the VAT return is the same.
Alternatively a bespoke VAT rate can be added on Xero using the VAT settings.