I made a mistake setting up my PayPal feed, and none of my PayPal sales have included VAT (I am VAT registered, and enrolled in MTD). I’ve corrected the invoices in the current period (and the feed settings), but the problem dates back 18 months or so (my VAT periods are quarterly).
What would be the best way to correct this mistake? I can’t amend the figures created by the VAT return, or any of the locked invoices.
My accountant has suggested raising an invoice within the current period for the outstanding sales amount (around £1,000) gross for VAT, then issuing a refund (which I presume would be a credit note) for the nett amount. The difference would then be what was due to HMRC and would appear in the current return.
I’m just not too sure which account(s) to do this with, or whether it matters.
Once you ready to submit your vat return, you notice little red drop down arrows, similar to one shown in image at bottom of page https://www.faradaykeynes.co.uk/vat-rules-on-goods-services click on it to adjust vat figures and give some narration.
As to what figure should it be , it depends how have paypal figures gone into previous vat returns and are you taking hit on vat or asking client to pay extra for vat
for example
paypal sale is 100
charges say 2
you get 98, is this 98 already included in your QF or not?
If not then you need to account for that too, best do invoice for 100 including vat
Or 98 is already in there then , you need to book 2 for papal charges and make adustment on vat return for 100/1.2=83.33 net sales , 100-83.33=16.67 vat