Hi
I submitted the company’s first VAT return last quarter and had to put in a manual adjustment for past VAT purchases that you can claim back in your first submission.
My VAT liability account is showing correct but the adjustment is under current liability under manual adjs code 2204.
Where do I transfer this amount to?
Many thanks
This is more a question for your accountant but the way I approached it when I first registered for VAT was fairly straightforward as everything I was reclaiming VAT on had been purchased within the current accounting year. In that case what I did was essentially to put my books into the same state they would have been had I claimed the VAT when I made the original purchases.
So for example I’d originally booked a big machinery purchase at £4,200 prior to becoming registered, that is £3,500 net plus £700 VAT so I did a £700 credit to plant and machinery and £700 debit manual adjustments. Another few hundred was on stock for resale that was on hand at the point of registration, so for that it was credit general purchases and debit manual adjustments, etc.
It may be more complex if you’re trying to reclaim on things you purchased in a previous accounting year, in that case definitely talk to an accountant.
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