I’ve noticed that the VAT amounts of my invoices dated October 2021 which have not yet been paid in are not included in the VAT return for October when I had a look. Is this correct. They are listed in the Purchase Tax Control Account 2201 but not included in the listing when I exported a list of the amounts included in Box 4 for October’s return. will they be included in the November return as they will be paid in November ?
It depends whether your vat settings are set to acural or cash accounting.
Which one do you operate?
Cash Accouting so I think vat from puchases is included in the month they are paid rather than the month they are dated?
That’s correct yes and would explain why it’s not included. It will be included in whichever qtr the payment is made.
Precisely. Cash accounting means you benefit because you don’t have to pay sales VAT to the taxman until your customers have paid you, but the quid pro quo is that you can’t reclaim purchase VAT until you have paid your suppliers.
As a retailer I chose accrual accounting for precisely this reason - I don’t give credit to my customers (I always get paid on the date of invoice), and accrual accounting means I can sometimes reclaim purchase VAT before I’ve paid it.
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