VAT balancing - VAT Liability and Purchase Tax Control Account

Accounting
1

I entered 2 VAT repayments into the current account and tagged them to the VAT liability account. My balance sheet is now showing my current account in credit from this entry plus an equal credit from the Purchase Tax Control Account where all my VAT purchases are registered, making my current assets double what they actually are. Any guidance please?

2

For those two repayments did you process the VAT returns on QuickFile? This is what it will balance against.

3

No I didn’t - will do from now on. So how can I fix it? Thanks.

4

The solution is to process your VAT returns on QuickFile, this journals the purchase and sales tax nominals and transfers it to the VAT liability account. When you then tag VAT the payment or refund from the bank account it balances the entries created by submitting the VAT return.

5

Yes I see but how do I fix my current problem?

6

If you don’t want to file the retrospective VAT returns in QF that back these repayments then just journal the balance from Purchase Tax Control to VAT liability.

CR: Purchase Tax Control
DR: VAT Liability

Any doubts I would discuss with your accountant.

7

Thank you for your help Glenn.

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8

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