How VAT moves between different categories when using the default VAT category within Accounting Start.
Every customer and business is different in many ways, one of which is how they use categories when recording entries in their accounts. Unfortunately, we are unable to provide advice on which category to use within Accounting. This article is just for guidance purposes to explain how VAT moves between different categories when using the default VAT categories within the software.
Depending on the VAT Scheme that you have selected within Start can mean that the movement between categories can differ. The below explains the main differences between Invoice and Cash Accounting.
Invoice based
- On this scheme you are liable to pay/receive the VAT at the point you generate an invoice, it doesn’t matter if the invoice is paid or not
- When you create a sales invoice the VAT goes to the category ‘2200 VAT on Sales’
- VAT on Sales stays in 2200 until you create a VAT Return for the period those invoices are in
- Once you create a VAT Return for that period VAT on sales moves from category 2200 to ‘2202 VAT owed To/From Revenue’
- If you make any Adjustment/Correction after creating the VAT Return that Adjustment/Correction will be logged in the category ‘2203 VAT Allocations & Adjustments’
Cash based
- On this scheme you are not liable to pay/receive the VAT when you create an invoice, it’s only when the invoice is paid
- When you create a sales invoice the VAT goes to the category account ‘2204 VAT on Sales Holding Account’
- VAT for paid sales invoices stays in 2200 until you create a VAT Return for the period those invoices are in
- Once you create a VAT Return for that period VAT on sales/purchases moves from category 2200 to ‘2202 VAT owed To/From Revenue’
- The VAT amount stays in holding categories until the invoices are paid. Once a sales invoice is paid, the VAT for that sales invoice moves from holding account to the category ‘2200 VAT on Sales’
- If you make any Adjustment/Correction after creating the VAT Return that Adjustment/Correction will be logged in to category ‘2203 VAT Allocations & Adjustments’
- Solution ID
- 230703094613983
- Last Modified Date
- Fri Aug 25 13:41:33 UTC 2023
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