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VAT accounts - confused!

Question asked by Evan Jolly 6 months ago

Hi all, I've recently started using Clearbooks, it's all great apart from I can't get my head around the VAT part.

My Accounting period starts from 1/12/18, which is when I started using CB. My VAT period also starts then (so next return is Dec, '18 - Feb. '19)

I have few questions:

  • My VAT control account is showing with an opening Credit. Not sure why this is?
  • How do I handle VAT payments from my current account? In Jan I paid the previous quarter's VAT bill, but it seems to affect the current figures as the dashboard shows 'VAT due from HMRC building up', which is not correct as they never owe me money!

I have to admit I don't understand the difference between the different VAT accounts - would certainly appreciate some help. Assume I'm stupid!

Thanks in advance

7 Replies

Hi Evan,

I have taken a look, there are three invoices prior to Dec 2018 which would have created a credit balance in your VAT control account.

In short, the VAT control account will accumulate all transactions with a VAT element, For example, all sales with VAT will accumulate a credit balance in the VAT control account; indicating a VAT liability to HMRC. In contrast, all purchases with VAT will accumulate a debit balance which can be reclaimed off HMRC. The difference between the Credit and Debit balance will indicate the Net VAT liability or the Box 5 figure of your VAT return.

I've noticed you import bank statemtents, when explaining VAT payments to HMRC, they should be coded to VAT control, which should clear your Net VAT control account balance.

Please let me know if you have any further queries?

Tommy

Hi Tommy,

Thanks for the reply!. That all makes sense thanks.

The thing I am struggling with is that those three invoices prior to Dec 2018 relate to the previous VAT period. I had to add those to Clearbooks as they were outtanding at 1/12/18. The payment to HMRC VAT on 7/1/19 is for the same VAT period (Sep. '18 - Nov.'19) but because I don't have all the invoices from that period in CB the numbers aren't adding up.

I tried changing the Vat Control starting balance to [HRMC Payment) - [pre-December Invoices] but it wouldn't let me.

Hope that makes sense!

Thanks

Hi Evan,

Just to clarify, for those three invoices, have you paid VAT on those in your previous Quarter?

Tommy

Hi Tommy,

Yes, those invoices were accounted for on my VAT return for the previous quarter. The payment that I make to HMRC on 7/1/19 covers those invoices, and the remaining invoices from that VAT return...

Thanks!

Evan

Hi Evan,

Perfect, so when you record the VAT Payment, this will Debit the VAT control account which should clear out the Credit balance accumulated from those invoices. You may also need to input the paid invoices for the previous VAT quarter into Clear Books. Alternatively, you can extract a Trial Balance from your previous software and input these via a journal.

Tommy

Hi Tommy,

Great thanks - I'll try inputting the previous invoices.

Thanks for your help!

Evan

Hi Evan,

No problem at all! :)

Tommy

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