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VAT on payment to account


#1

hi, just wondered why the system asks for VAT on a Payment to account,

i have a payment received for £30

client currently has 3 invoices outstanding none of which equal amount so i wanted to check, i probably will part pay it, but for the future what would i select.

the invoices outstanding already have had vat calculated.

thanks
scott


#2

I can understand this if you’re on cash accounting as you account for vat when the payment is sent/received even if it hasn’t been assigned to an invoice yet. If the payment is subsequently assigned to an invoice that has a different vat rate I believe QuickFile will recalculate and adjust it in the next return if necessary.

I’m not on cash accounting but I’ve noticed it does the same thing for me. Though looking at the VAT rules it does seem that even on accrual accounting a tax point is created when a payment is received prior to the invoice being raised so presumably QuickFile is taking this into account.


#3

im on accrual accounting too.

do you set it to zero? i suspect thats the case, i assume the feature is in the scenario where you are taking a deposit for something before any invoice raised, you are meant to declare the vat at receipt stage i believe.

if you were going to raise an invoice shortly after before your quarter id have thought zero again…

cheers


#4

Someone from QuickFile staff will have to comment for the definitive answer, but my understanding is that if you declare the VAT for a prepayment at one rate (say 20%) and that gets pulled into a return, then you subsequently assign that payment to an invoice at a different rate (say half zero rated and half 20% lines) then the VAT declared on your next return will be adjusted up or down automatically. If the invoice you attach the payment to is at the same VAT rate as you said for the original payment then there won’t be any more vat to pay as it’s already been accounted for at the payment point.