Purchase amount not included in VAT return when payment occurs in the reporting period prior to the supplier invoice date.
I have just noticed this, which I’ve not spotted before because it’s probably only happened to small amounts, but it’s just happened on a really large invoice which will cause me some cashflow issues, so I just wanted to check that it’s correct.
I sold a large number of computers to a customer on a pay on order basis, I invoiced them in Apr and they paid me the same month, I immediately paid a pro-forma invoice to the distributor but they didn’t issue their full invoice until May when the items shipped.
I believed that cash accounting meant that payments were taken into account on the date the payment leaves, not the invoice date, but I’m not sure if that applies to payment on account, or only on delayed payment of issued invoices?
It should include the payment in the quarter where payment was made - if you tag the payment on account and specify the correct VAT rate at the time then it should calculate the amount to reclaim on the return based on that rate. Then when you later assign the payment to an invoice any discrepancy between the VAT that QuickFile estimated on the payment and the VAT amount actually charged on the purchase will reconcile automatically in the next quarter.
I’m not sure what happens if you’ve assigned the prepayment to a purchase before you submit the earlier quarter - whether it’ll use the invoice amount straight away or if it’ll still do the estimate-and-reconcile cycle. But as always the way to get a definitive answer is to go to the screen to prepare the relevant VAT return and use the export button to generate a csv of exactly what contributes to each of the box values. You can do this export any time, before or after actually pressing submit.
Thanks Ian, I think you’re absolutely right that it wasn’t using the estimate and reconcile because I’d linked the payment directly to the invoice, but when I tagged it as a payment on account and then logged the payment from there it ‘worked’.