Question asked by Susan Haggerwood 8 years ago
Hi
I've just started using Clearbooks and I need to put a manual journal on for the last VAT quarter. I'm confused as there's a VAT control, Vat cash control and Vat payable. I usually just DR the sales vat, CR purchase vat and CR/DR Vat liablity.
Help!
Sue
Hi Sue - yes it's confusing
The cash control is used if the business is on cash accounting, so raising an invoice sticks the output VAT in the cash control and then, when the invoice is paid, the system transfers the VAT to the vat control.
So the vat control is what populates the VAT return but you then have two alternatives. The default is that the system generates a bill to HMRC clearing the control account however, if you prefer, you can switch on a "Toggle feature" to create a journal instead, which sticks the liability in the VAT payable account.
So, longer term decide whether you are OK with HMRC bills (and ignore the payable account) or toggle on the VAT journal option, and use the payable account.
Easy eh?!
Best answerYeah right!! Thank you so much. Which option would you go for??
How would I do the journal?? I have vat reclaimed (box 4) only purely on purchases?
Another easy question !
It depends on what makes sense to you. Many users (and some of my clients) like to see all debts listed in one place (ie unpaid bills or aged creditors report) and so leave the VAT liability as a bill.
Other users (and many accountants) recognise that, under general accounting principles, debts to HMRC are not "trade creditors", and so prefer to have them shown separately in the payable account.
To add to the debate, you have the same thing with creating director/employee expenses, ie they default to being bills owed to the person, but you can toggle them to accumulate in "John Doh - expenses" type accounts. Unfortunately though, if you use payroll this will always generate bills in favour of employees (net pay) and HMRC (PAYE), so no toggle.
So, on balance, the short answer, stay with bills and ignore the payable account.
Hi again, this really depends on whether you are on cash accounting or not? If on cash accounting you should enter the unpaid invoices & bills so that the system picks them up when paid in future quarters.
Generally though I'm confused by needing a journal for last quarter's liability in that you should be entering all opening balances at a date (perhaps using "getting started") and so one of these will be the VAT debt on that date.
If not then, as you said at the top, just use the purchases account for the credit.
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