I am self employed. I have tagged a VAT payment I made to HMRC with my business current account to (2202), but now it shown up on the balance sheet as an asset, and now shows as profit on the P&L sheet. When it is not tagged it shows in my suspense section as a negative, but once tagged the sum disappears from the suspense section and the net profit figure then jumps up by the tagged amount. Surely this is not right? Am I doing something wrong?
Tagging VAT payments won’t touch the P&L, 2202 is a balance sheet code.
When you originally filed your VAT return it would have created a liability on 2202, by tagging the payment to HMRC this would NET off the liability from the return.
I did not file the VAT return through Quick File, I did it on the HMRC site. All I know is that when I tag the VAT payment it increases my Profit on the P&L. I take it that is because I have no liability for this payment on 2202 because I did it on the HMRC site and not on QF. Do I need to make this VAT liability Manually or something so it cancels each other out like it’s suppose to?
If you didn’t file the return on QF your opening balances should have included a liability on the VAT account (2202). If it wasn’t on your OBs you need to journal it in manually.
CR: Bank (1200)
DR: VAT Liability (2202)
Tagging a VAT payment doesn’t affect any P&L nominal codes (4000-9999) so not sure why your P&L changed, but it wouldn’t be from tagging a VAT payment.
I just need to figure out how to remove the asset that appears when I tag the VAT payment from my current account. It is the asset from tagging the payment that makes the profit increase on my P&L sheet. I have tried to journal it away, but can’t figure out how to do it.
Ok so I have been trying to resolve this, and the only way I can get it to go right is to do it how you said and:
CR: Bank (1200)
DR: VAT Liability (2202)
But I have to then delete the payment from my current account as the journaly makes a duplicate entry for this same payment amount and if I then tag the actual transaction then I again have an asset I shouldn’t and also my current account will no longer banance.
Have I got this right now, is that the way you do it?
Also what opening balance are you referring to? I have never had to enter any opening balance, accept for current accounts and credit card accounts and so on. I have never seen anywhere to add a liability to the VAT account (2202).
What accounting software were you using before you started using QuickFile, i.e. when you submitted your VAT return. The accounting software should generate a full trial balance you can export and import into QuickFile, this would then cover any VAT liability that existed at the point of moving over to QF.
I was not VAT registered before I started using QF. I started using it from the date of my VAT registration. Before that I was just using a simple money in money out system.
It comes back to the above then, how did you calculate the VAT return figures you plugged into HMRC? When you submit a VAT return on QF it will journal the net of your sales and purchase VAT (2200 & 2201) to the liability account (2202).
You would need to either manually enter that journal or use QF to submit your VAT return.
To get the VAT return figures I used QF and went to create VAT return and it displays the figures as if I was submitting it through QF. However I just took these figures and entered then manually on to the HMRC’s site and submitted the VAT return that way and did not use QF. I did this becasue it was my first VAT return and I was unsure about using QF for it.
I can’t submit this VAT return through QF, as I have already completed it through the HMRC web site, so how would I journal this sum to the liability account to fix this issue?
Raise the VAT return for the same period in QF, check the figures match what you submitted (if not manually adjust) and save. This will then create the journal for you which will bring the VAT liability on 2202 to zero.
I am trying to submit the return for the dates 1st March to 30th September 2014. I had to submit these dates as I was late registering for VAT and these are the dates HMRC wanted for my first return.
Is the way around this to just enter them in QF in 3 month chunks, like March - May, June - August, and then September on it’s own?
So if I do it like this and submit 1st July to 30th September, do I manually adjust the figures on this submission to reflect my return that I made, because as they are they are only figures for the dates entered and not from the 1st March.
I am close to getting this right. The VAT is now showing under 2202 as a liability, but the figure is £2.22 to much.
For example if the liability should be -£95 and that is the amount submitted on the VAT return, it is showing as -£97.22, so the figure is £2.22 to high. This is just an example, but it illustrates the issue. Any ideas?
I rolled it back and tried again, but still £2.22 too much is being put under the VAT liability section now. It is strange, I have looked at the calculations and can’t make head nor tail of it.