Hi All
I am setting up my account and I seen a post from Ian-Roberts who was helping someone.
That person wasn’t VAT registered but I am, I followed is instructions and it all worked out but I am left with £188.80 on the balance sheet (sales tax control account 2200)
Should I have put that amount in my opening balance or can I just do a journal from sales control tax account to what I believe should be retained profits?
ian_roberts Nov 2023
The most correct approach is not to set an opening balance on debtors control but instead create the unpaid invoices on their original dates as invoices in QuickFile. You would also need to reduce your “retained profit” opening balance by the same amount so that everything lines up
when you have created the outstanding invoices and then run the QuickFile year end process for the previous year.
With this in place you should be able to log “payment from a customer” for the previous year invoices exactly as you do for this year’s invoices that originated in QuickFile.
It depends whether you’ve already submitted and paid the VAT return that those unpaid purchases belong to.
When you raise an invoice with VAT the VAT element initially goes to the sales tax control account. When you submit the corresponding VAT return the total sales tax collected and purchase tax paid on the relevant entries is deducted off the sales and purchase tax control accounts, and the net result (i.e. your box 5) goes to “VAT liability”. When you pay (or receive the refund from) HMRC, the bank payment then nets off against VAT liability.
So if you’ve not yet submitted the VAT return that the invoice belongs to, then there’s nothing to do - the amount will migrate to VAT liability automatically when you submit the return.
If you’ve submitted the return but not yet paid the liability then you probably need to journal that sales tax control amount over to VAT liability, so it will disappear when you pay the VAT return.
If you’ve already paid that VAT return then I’m not sure where the amount would go, it’s probably already been accounted for in your old system so it’ll need to offset somewhere but I’m not sure where exactly. I suppose you’d have to adjust your other nominals from your previous trial balance to remove the effect of this invoice entirely, so you can then journal it back into the right place.
This assumes a new start with quickfile coming from excel with 2 outstanding invoices and one VAT return from the previous year, which have been submitted and paid off in this year along with the invoices that was paid as you can see from the Bank account photophoto below.
Which makes me feel that the £188.80 actually belongs to me and should go to retain profits, if you look at the balance sheet you can see the difference from the bank account and the retained profit is £188.80
