Hi,
Having searched for an answer to this question, I came up with this thread
but it doesn’t follow through to conclusion. Why are the journals different to the VAT returns for cash accounting? And overall how is that to be resolved? It leaves the VAT liability account with a littering of error balances so that it never returns to zero, which is both frustrating, and wrong.
Balance sheet vat liability account is always on accrual basis whereas vat return can be on cash basis hence it will always be different requiring vat reconciliation for accounts in this case. There is nothing wrong with system
That doesn’t make any sense though. I appreciate that the purchase/sales control accounts will always record the accrual liability, but why does the system not journal the same amount of money from the purchase control acc to the vat liability account as it shows on the VAT return? This always leaves the liability account at an incorrect value.
I don’t think it does.
Accounts are accrual basis, Vat is cash basis. So balance sheet will show a difference in vat liability compared to the actual cash basis liability. Which in my opinion is the correct treatment.
Test it with an account that operates acural basis vat and see if there’s a difference.
Accounts are prepared under accrual basis not cash , legal requirement for companies and most of non incorporated business, so sales vat , purchase vat will be on accrual basis
Maybe I’m just having a blond moment. So in this case the VAT return shows purchase vat of £1288.19 to be reclaimed. The journal moved £1214.44 purchase VAT into the liability account. Hence once the VAT bill is paid the liability account shows as £73.75 VAT owing. Why does the journal move a different amount of VAT to the amount that it actually has included on the VAT return?
It’s the difference between sales invoice vat less purcahae receipt vat minus payment received less payments made id imagine. With a bit of difference to allow for dates when payments received and made.
Do you have any EC acquisitions? I’ve just compared my latest VAT return with the generated journal and I see that is hasn’t included EC purchases. The “sales VAT” journal amount only includes box 1, not box 2, but then the “purchase VAT” journal lines also exclude those same purchases (the amount it has journalled is box 4 minus box 2) so the overall liability remains correct - it has left out both sides rather than “paying” the acquisition VAT and then “claiming” the same amount of purchase VAT.
No, none of those. It is just the purchase VAT values that are different.
Hi @BBK, if you send a private message over to @QFSupport or to me and include the account number, we’ll gladly look into this for you.
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