VAT Claim Hire Purchase
Question asked by Sam Jackson 3 years ago
I have a bit of a weird question for you regarding a hire purchase agreement.
We have financed some kit. Our account recommended we opt for a Hire Purchase option so that we could claim the VAT element in the earlier period, as we run on a cash based system. The initial payment to the lender was for the VAT element of the total invoice. However this leads to complication on how to account for the net amount on the VAT return in box 7 when it hasn't been paid yet.
What is the best way to approach this? Initially my thoughts were to create two separate bills, one for the VAT element and a second for the Net element. Reconcile the initial payment (the VAT bill) and then reconcile the net amount on a monthly basis over the coming 24 months, however this doesn't work. Any help would be appreciated asap as I've left this to the last minute as per usual!