VAT return not picking up VAT on sales

Accounting
1

I had to adjust an invoice to account for 5%VAT an income for sales. I did a journal to debit sales and credit VAT liability on 30/09/2017
Also there was a refund of VAT for the previous Quarter which posted as a credit to VAT liability. I did a journal to debit Vat Liability and Credit Misc Income on the date received 08/08/2017
The return fot this Quarter 30/09/2017 is not showing any VAT duue on sales in Box 1
Is something done incorrectly

2

Hi @BobQ

Just to confirm, are you querying why VAT isn’t being picked up from a journal, or is it missing out VAT from sales invoices?

3

This shouldn’t have been necessary as the previous VAT return (that generated the refund) should already have left a debit on the VAT liability nominal which would be cleared when you received the refund from HMRC. A VAT refund isn’t “income” and definitely shouldn’t appear on your P&L.

4

Why there is no figure in Box 1 of the VAT return

5

Because QuickFile VAT returns are based on sales and purchase invoices, and by design they don’t pick up values from journals. If you had edited the original invoice to convert it to 5% VAT (i.e. reduce the net and add VAT to bring it back to the same grand total) then that would have been picked up by the VAT return. Alternatively you could issue a credit note to cancel the original invoice (hold the funds on account) and then a new invoice with the correct VAT rate (and pay from credit). This credit note approach would be the way to correct errors where the original invoice is already locked by a previous VAT return.

If you do find you need to correct errors using journals then these won’t be picked up automatically by the VAT return. I would recommend posting such journals to “manual adjustments” rather than to “vat liability” directly, and then make adjustments to the VAT return boxes using the little drop down adjustment arrows. Adjustments made in this way that affect the VAT due post their balancing entry to the same “manual adjustments” code, which will net off against the journals you created earlier.

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