Opening balances for debtors control account, client account & VAT treatment

I am starting to use QuickFile from 1 February as that is the start of our VAT reporting quarter, however our year end is 31 March. I will run two accounting software packages until the end of the financial year in order for me to complete the year end accounts.

I have entered my opening balances to my nominal accounts using the journal from settings as per the knowledge base. I have only one debtor with an outstanding balance. When I try to enter the opening balance for this client, an invoice is created and then the debtor control balance is doubled. How do I sort this out?

Also, do I make the invoice correct? i.e. correct date (before transferring to QF), with VAT? If I do, won’t it then increase the VAT liability? However if I don’t include it, when the payment is received, presumably the VAT due won’t calculate correctly at the end of the VAT quarter (we use cash accounting VAT).

Thank you.

Hi @Silverfrost

Once you have the opening balance invoice in place, edit your journal to offset the figures from the invoice.

For example, if the invoice affects General Sales and the credit control account, update these lines in the journal to reflect this.

When you create it, it should be included in your return. The VAT figure and the date need to be accurate. Just ensure your VAT start date (Reports >> VAT Returns >> VAT Settings) is at the correct date. As you’re on cash accounting, it won’t be included in your return until it’s paid, and the payment date is used.

I hope that helps!

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Thank you for your reply Matthew

Do you mean that I should make a new journal entry or amend the one for the opening balances? Is the credit control account the same as the debtors control account? (sorry, I am only used to working with a single “Accounts Receivable” account which is the total of the outstanding clients’ balances).

But if I do that won’t the VAT liability account increase by this invoice VAT amount? It is already included in the opening balance of the VAT liability.

Likely, yes. But as part of the adjustment to the opening balances, VAT will be one of the lines you’d edit.

When you create the invoice, if you go to More Options >> View Nominal Ledger Entries, it’ll show you exactly what the invoice has created. If you adjust each of the lines of the opening balance journal to account for this, the doubles would be removed.

I couldn’t find View Nominal Leger Entries in More Options but after looking at the balance sheet and P&L I think I have worked it out. In the opening balances ledger, I have deleted Debtors’ Control Account (as the only amount in there was from this invoice), debited General Sales (to contra off the credit from the invoice) and debited Sales Tax Control Account (which is where the system applied the VAT). The balance sheet and P&L are now correct.

This has, however, thrown up another enquiry - how does Sales Tax Control Account differ from VAT Liability? I have entered my opening balance into VAT Liability as this is the name of the account in my previous software but maybe this is wrong. The system obviously adds VAT charged to customers in to Sales Tax Control Account - does it then move the amount over to VAT Liability when the invoice is paid?

Thank you.

Just for reference, when previewing an invoice, you can see it there, although apologies on the wording - it is slightly different to what I said it was:

This then shows you something similar to this:

Sales tax control account is the amount of VAT charged on an invoice, whereas VAT Liability has been confirmed through a VAT return and is outstanding with HMRC.

Until you submit a VAT return, the VAT will be in the tax control account.

Hope that helps?

Show nominal ledger entries is there now (when I go back and look at the draft of the invoice, it wasn’t before) and I think I have the entries correct.

Edit: I think I have sorted it all now. Thank you for all of your help.

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