Post journals so the VAT Return is correctly affected

Solution Properties

Solution ID:

200427112208991

Last Modified Date:

Wed Mar 23 14:24:10 UTC 2022

Taxonomy Path:

Case category//How do I...//processing

Author:

[email protected]

Post journals so the VAT Return is correctly affected - UK only

Description

How the VAT Return is affected by journal entries depends on the nominal code and tax code you use to post the journals. When you post journals to adjust the VAT Return you cannot reduce the values in a box, you must increase the values in the opposite box. For example, if you want to decrease the value in Box 1 you must increase the value in Box 4.

The VAT Return includes an Adjustment s option which you can use for manual adjustments in preference to journal workarounds.

This article explains how to post journals to affect the boxes on the VAT Return.

TIP: For more information on how to post a journal - Read more >

Cause

Resolution

To post a journal

On the navigation bar click Nominal codes, then click Journal entry.

The following table advises which journals to post to effect each box on the VAT Return.

The default nominal code for the Sales Tax Control account is 2200 and the default nominal code for the Purchase Tax Control account is 2201.

Box to affect	Journal Credit/Debit	Nominal code	Tax code
Box 1	Journal Credit	Sales Tax (2200) or Purchase Tax (2201).	T1
	The other side of the journal is usually posted to the nominal code affected by the net amount.
Box 4	Journal Debit	Sales Tax (2200) or Purchase Tax (2201).	T1
	The other side of the journal is usually posted to the nominal code affected by the net amount.
Box 6	Journal Credit	Any nominal code other than the Sales Tax (2200) or Purchase Tax (2201).	T0, T1 or T2.
Box 7	Journal Debit	Any nominal code other than the Sales Tax (2200) or Purchase Tax (2201).	T0, T1 or T2.
Box 8	Journal Credit	Any nominal code other than the Sales Tax (2200) or Purchase Tax (2201).	T4
Box 9	Journal Debit	Any nominal code other than the Sales Tax (2200) or Purchase Tax (2201).	T7 or T8.

If you don't want to affect the VAT Return you must use a T9 tax code.

Example 1

For a £/€1,000 net sale to nominal code 4000 with £/€200 VAT, post the following journal:

N/C	Name	Details	T/C	Debit	Credit
4000	Sales nominal code	Net Sales	T1	0.00	1000.00
2200	Sales Tax Control Account	VAT	T1	0.00	200.00
1200	Bank current account	Bank	T9	1200.00	0.00

This would affect boxes 1 and 6 on your VAT Return:

Box 1 - 200
Box 6 - 1000

Boxes 3 and 5 are also impacted as these calculate using the value in box 1.

Example 2

For a £/€500 net purchase to nominal code 5000 with £/€100 VAT, post the following journal:

N/C	Name	Details	T/C	Debit	Credit
5000	Purchase nominal code	Net Purchases	T1	500.00	0.00
2201	Purchase Tax Control Account	VAT	T1	100.00	0.00
1200	Bank current account	Bank	T9	0.00	600.00

This would affect boxes 4 and 7 on your VAT Return:

Box 4 - 100
Box 7 - 500

Box 5 is also impacted as this calculates using the value in box 4.

[BCB:19:UK - Sales message :ECB]

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