We have just completed our quarterly VAT return. However, although the VAT to be paid amounts are completely fine and correct we have suddenly developed a problem with Boxes 6 and 7 on the return. These are:
Total value of sales, excluding VAT Total value of purchases, excluding VAT
They are hugely inflated above what they should be. This has never happened before. When I looked into the detail it showed that the VAT return was including bank transfers in this amount (although not including these obviously when calculating the VAT).
We don't want to put these numbers on the form as they totally misrepresent our business. They are simply from making a lot of transfers between savings and current and back again in the last three months.
I have looked to see if there is a place for excluding these transactions but can't find it.
Can you give us any advice? It is a pain because I would like to be able to just run the VAT return and get the right figures.
Thanks very much, EC
-- Edited by ECBS on Friday 26th of March 2010 02:14:14 PM
Possibly you have made the transfers via Sage using Tax code T0? (hopefully not T1 as you may be calculating vat in there!). If this is what has happened in your journal or when reconciling the bank accounts, then you must use T9 as T0 will get included.
Hello. Are you saying that the Sales output tax is ok but the net sales figure is much higher than what it should be. and the Net purchases figure as well. When you have tranfered money between bank accounts have you checked the Bank transfer postings, when you posted the bank transfers did you mistakenly use a vat code we all make mistakes. As it seems as though the transfer has been allocated a vat code. Otherwise why would it show up on the Vat Returns report. The Bank Transfers should have been Journalised with a NIL VAT CODE.
What Account software are you using.
-- Edited by Davey on Friday 26th of March 2010 02:45:23 PM
If you are using Sage, it sounds like your non-vatable tax code is set to something other than T9. All journals and bank transfers should be T9.
Depending on what version you are using, go to Settings - Company Preferences - VAT tab and make sure your non-vatable tax code is set to T9. Not sure if this will change any transactions you have already done, so unfortunately you may have to go into file maintenance and change the tax code on each one.
