I’ve just made my first VAT return with VAT owed to HMRC. No problem submitting it electronically but my query concerns the accounting entries that I need to make to record actual payment to HMRC in six weeks time. I can see that the VAT liability A/C now shows the amount that I own HMRC.
Once HMRC have taken their VAT payment by DD, do I just do the following journal entries for the value , or is there a better method?
You don’t need to use a journal - if you have a bank feed the transaction will appear untagged automatically, if you don’t have a feed you need to “input new transaction” yourself to create it, either way you then tag this transaction and select “tax payment to HMRC”, then “VAT liability” and that will assign it to 2202.
Hi Ian, many thanks for the reply. However I only have a few transactions a month so don’t bother with a bank feed. I use journals for pretty much everything as it only takes a few minutes and do the bank reconciliation by hand against the bank statement. Given this, is my journal solution the best way do you think?
When you’re looking at the current account “bank statement” view there’s a button at the top labelled + Input New Transaction which you can use to create bank account transactions by hand (rather than having them either imported from a feed or created automatically as a side effect of logging payments or creating journals). New transactions appear with a red button in the “status” column which you can click to “tag” them, and one of the options that pops up there is “tax payment to HMRC”.
When you’ve successfully tagged the transaction the red button will go green the same as the other pre-tagged ones.