VAT cash accounting - payments on account

Hi Paul

There is a project on the go to enable proper VAT reporting of these but, in the meantime, the way it works with cash accounting at the moment is as follows.

You may enter a payment on account today and then, in a month or two's time raise an invoice and allocate the payment against it, either on the "Unallocated Cash" screen or by hitting "Allocate payment" on the invoice. This does trigger a VAT return entry but dated the date of the payment. This is fine if the POA and the invoice are in the same VAT period but if the POA was in a previous VAT period, you have to remember to tick the "include late invoices" button on the VAT return screen to pick it up. Many do this by default anyway.

This is strictly incorrect the POA should have been returned in the previous VAT period, which is why a fix is being worked on.

There are several current workarounds if this is a problem. One is to just record the POA as a sale item putting the VAT to the VAT control but the net to a balance sheet account, eg you could have a "Sales POA" account in trade debtors.

Then when the Invoice is produced you create an extra line "Less POA" with a negative sum to the same "Sales POA" account, effectively reversing the POA entry and leaving the balance to pay as normal.

I think this works, but as I say, there are other workarounds. My view has always been I'd never send £100 on account to anyone without a bill, besides which, if the supplier & customer are VAT registered the supplier must provide a VAT bill within 30 days I think.

Hi Paul

There is a project on the go to enable proper VAT reporting of these but, in the meantime, the way it works with cash accounting at the moment is as follows.

You may enter a payment on account today and then, in a month or two's time raise an invoice and allocate the payment against it, either on the "Unallocated Cash" screen or by hitting "Allocate payment" on the invoice. This does trigger a VAT return entry but dated the date of the payment. This is fine if the POA and the invoice are in the same VAT period but if the POA was in a previous VAT period, you have to remember to tick the "include late invoices" button on the VAT return screen to pick it up. Many do this by default anyway.

This is strictly incorrect the POA should have been returned in the previous VAT period, which is why a fix is being worked on.

There are several current workarounds if this is a problem. One is to just record the POA as a sale item putting the VAT to the VAT control but the net to a balance sheet account, eg you could have a "Sales POA" account in trade debtors.

Then when the Invoice is produced you create an extra line "Less POA" with a negative sum to the same "Sales POA" account, effectively reversing the POA entry and leaving the balance to pay as normal.

I think this works, but as I say, there are other workarounds. My view has always been I'd never send £100 on account to anyone without a bill, besides which, if the supplier & customer are VAT registered the supplier must provide a VAT bill within 30 days I think.