Vat on prepayments

Question asked by Tracey Matthews 2 years ago

Hi, When adding items on prepayments, it advises that it should be 'outside of scope' for VAT, so my purchase invoice (that has 20% VAT) has been logged without VAT, I was expecting when the releasing the amount to the expense account each month (in this case - computer expenses) that I could account for the 20% VAT, so I ticked 'purchase VAT' on the journal. It does appear on the VAT return as a manual entry, but doesn't include the 20%?

Should the Prepayments VAT section be changed to the relevant rate, despite the warning message that appears on the bill entry? Thanks.

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