Reversing VAT on locked transactions

Hi, just wanted to check that I have come to the right conclusion…if you discover VAT reclaimed on a purchase quite some months after the event, so rolling back all subsequent VAT returns would cause chaos, is the best way of correcting it by journalling the VAT amount back to the expense code and then making a manual adjustment on the next VAT return? The manual adjustment would then cancel out the VAT jnl.


Exactly that :slight_smile:

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Yes, if you create a journal to credit the VAT amount from the expense code and debit it to “manual adjustments” (2204) then it will balance automatically when you do the adjustment on your VAT return (as the automatically generated VAT return journal will credit 2204 for the amount you added to box 4).

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