HOME / COMMUNITY Switch to knowledge base

VAT return - Credit Card payments

When purchasing on a credit card it sits in a “made up account called CREDIT CARD” and when the payment is due to go out - which could be 30 days later and its is tagged.

For VAT purposes if your VAT Quarter crosses over and when the purchases have taken place to when the CC payment is paid. Will it pick up on the next VAT quarter? and be placed on the VAT return, as these would be tagged after the VAT was submitted.

Hope I make sense on this query!
Thanks

It depends on whether you use cash accounting or accrual. Cash it will register when paid. Accrual it will register when purchase is entered. It’s all based on the date of either.

how do you check that again please

just found Sorry! on cash accounting

So the figures will be picked up on the next VAT quarter?

My barclaycard does not go out till 10 March, when coming to tag the payments from the business bank account to the credit card account - the period for example is “Nov-Jan”. It get locked when VAT return is submitted. If i am to tag the PAYMENT gone out from the business bank account will it pick up payments and deduct from my Vat return for the next quarter?

No. I think you misunderstand a few things.

The money coming out your bank is a payment to your credit card company. That’s not a payment for expenses neither is it vat. When the credit card payment is made that IS a payment for the purchase and DOES include the vat.

You say your on cash accounting. So when your credit card pays the expenses whenever that is on whatever vat period. That is when it will be picked up on your vat return.

The HMRC notice about VAT cash accounting says:

The following 2 paragraphs have force of law.

If you pay by credit or debit card: the date of payment is the date a sales voucher is made out for the payment.

If you pay by cheque: the date of payment is the date you send the cheque, or the date on the cheque, whichever is later.

Ref, in particular section 4.5

So the payment date is when you made the card payment in the “made up account”, not when you paid the credit card bill.