I have a problem with the purchase tax account. I have recently taken over the bookkeeping of a small company. I have understood from my bookkeeping course that once you do a VAT return you do the VAT transfer wizard to clear the purchase and sales tax accounts. This has never been done on the books I have just taken over so everything is just adding on top of what is already there. Anyway, I have recently done a tax return and the amount in box 4 does not match the amount that sage has in the purchase tax account. Basically I done a trial balance prior to entering the tax return and the purchase tax was at 8,438.61. I then entered in all the VAT return info such as receipts and invoices. I created the return and the VAT reclaimed on purchases came to 1,996.34. I have checked the trial balance again and the purchase tax account now stands at 10,039.36, but if I add 1,996.34 (the vat reclaimed on purchases) to 8,438.61 (the old trial balance of the purchase tax account) I get 10,434.95 which is more that what the purchase tax account shows. I am misunderstanding something - I am a bookkeeper in training so it would be good to get some help
1. There was already some items posted to the purchases tax account that are in the period you are reporting the VAT return on.
2. There are some items in an earlier period that havent been reconciled from a VAT viewpoint and you are including them when you do your VAT return. ie as they havent already been reconciled they are getting picked up on your return irrespective that they are dated before the start of your VAT period.
Can only really be answered by looking at the info.
Not sure which software you are referring to, but presume it's Sage - if so, not everyone uses the transfer wizard. If so, you just have to reverse the previous VAT returns.
dr output vat cr input vat cr vat liability (if it's a VAT payment, obviously change dr to cr if it's a refund)
That's the theory - in relation to your predicament, I think I agree with Mark and would suggest that this won't easily be resolved through a site like this, may have to sit down with the previous bookkeeper or the accountant.
I have a problem with the purchase tax account. I have recently taken over the bookkeeping of a small company. I have understood from my bookkeeping course that once you do a VAT return you do the VAT transfer wizard to clear the purchase and sales tax accounts. This has never been done on the books I have just taken over so everything is just adding on top of what is already there. Anyway, I have recently done a tax return and the amount in box 4 does not match the amount that sage has in the purchase tax account. Basically I done a trial balance prior to entering the tax return and the purchase tax was at 8,438.61. I then entered in all the VAT return info such as receipts and invoices. I created the return and the VAT reclaimed on purchases came to 1,996.34. I have checked the trial balance again and the purchase tax account now stands at 10,039.36, but if I add 1,996.34 (the vat reclaimed on purchases) to 8,438.61 (the old trial balance of the purchase tax account) I get 10,434.95 which is more that what the purchase tax account shows. I am misunderstanding something - I am a bookkeeper in training so it would be good to get some help
