VAT and Journal adjustments

Support
1

Hi,

I’m trying to (retrospectively) reconcile my new QF accounts with my manual accounts and VAT returns. I’ve successfully imported and reconciled all my purchases and sales. However, I want to make an adjustment to only include 50% of the amounts on the invoices relating to my mobile phone bills which have been entered in full. I made a journal entry as follows:

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The Balance Sheet looks fine:
2201 Purchase Tax Control Account decreases by £10.12
1201 Directors Loan Account decreases by £77.76
P & L Account increases £67.64

However, when I create the VAT return (none submitted yet), there is no change to the ‘VAT reclaimed on purchases and other inputs’. Now I would have expected this to decrease by £10.12 but it has not changed after the journal entry was made. Why is this?

I’m assuming that I can make a manual adjustment to the VAT return to reflect these changes. However, how does that affect future returns as far as QF is concerned. Does QF ignore any adjustments to VAT returns? Does it change anything in the accounts?

Is there a way I can make the adjustments which would automatically be reflected in the VAT return?

How would you advise that I deal with this situation? I don’t want to split the invoice into personal (no VAT) and Business (with VAT) because I don’t want the personal bit to hit the P&L - I would rather remove it altogether from the accounts. If I was doing it manually (ie not via import), I would probably do it this way.

Regards
Keith

2

In short, VAT return calcs are driven by invoices. The above journal should instead be entered as an invoice and paid from the Directors’ Loan Account. That will still give you correct BS and P&L figures as well as an accurate VAT Return… try it.

3

when you say ‘an invoice’ I assume you mean I raise a purchase invoice (in this case it will be a credit note) with VAT apportioned to 7502 (Telephone) but paid via the Directors Loan Account.

Regards
Keith

4

That’s correct, you can log a new purchase and enter negative figures to trigger a credit.

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When saving you can nominate the directors’ loan account.

5

Thanks.

That worked a treat

Regards

Keith