My Box 1 in VAT return is not picking up a 06.06.23 invoice for the period May to July, please advise why this would be, it has VAT on the invoice and is in the period for this return
Is vat setting on cash or accrual basis? is invoice paid or not?
VAT is cash accounting and invoice was paid in August
Cash basis vat , invoices only get picked based on payment date
As you are on cash accounting, the payment date is used to assign invoices to the returns.
I have take a look at your account and I can see the invoice dated 06/06/23 was paid on 14/08/23
If the payment date is incorrect you can edit it in the bank screen.
Thanks, I didn’t know that, should i be on a different VAT accounting then I wonder?
If you are unsure it may be worth having a read of the article I have linked below or speaking to your accountant for advice
Which scheme is better for you depends on various factors. Rule of thumb is that if you tend to take longer credit from your suppliers than you offer to your customers then you’re probably better off on accrual basis, if your customers take longer to pay you than you take to pay your suppliers then you’re probably better off on cash accounting.
Cash accounting you don’t have to hand over the vat on your sales until your customer has paid you, but you also can’t claim back vat on purchases until you’ve paid your supplier.
Accrual accounting you can claim back purchase vat as soon as you have an invoice from the supplier, but you also have to pay over your sales vat as soon as you have invoiced your customer, even if they don’t pay you til months later.
When I was VAT registered I was a retailer where all sales are paid immediately, so for me accrual accounting made more sense - it made no difference on the sales side but meant I could sometimes claim back purchase VAT sooner.
Can I ask, will it matter if I change now to accrual from cash accounting.
If you change schemes then you will have to make a one-off correction on your first return under the new scheme, because you need to make sure you’ve accounted for VAT correctly on every item once and on no item twice. There’s more details in this thread (the OP uses the term “day book accounting” to mean what we’re calling “accrual accounting” here):
Thank you so much, yes I get what you’re saying. Thanks for link.
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