I've had to enter an invoice as a journal as it's an inter-company transaction, so therefore there will be no "payment".
I initially did Cr other company, dr Expense account and VAT liability account. Then I decided that perhaps it should be the Purchase tax control account rather than the liability account, but neither option showed up on the VAT return.
Would I just add this manually?
It's Sage 50 by the way.
-- Edited by debzinkent on Thursday 19th of May 2011 11:53:52 AM
I don't know how it works on Sage, but on Tas (owned by Sage) the VAT return ignores journals. Personally I would have a PL account set up for the other co and enter in the normal way as an invoice, thus accounting for the VAT etc. If necessary at the end of the year/month/quarter the balance of the PL account could be journaled to an intercompany account to clear it out of the PL.
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Jenny
Responses are my opinion based on the information provided. All information should be thoroughly checked before being relied on.
I believe (from memory) that journals posted in older versions of sage would not show up on the vat return. In newer versions of a tax code can be applied to journals, and the transactionis then included on the return.
However it appears that this is still a vatable sale, then surely a vat invoice should be raised. It is inter-company so will be negated by the consolidation process when producing the group accounts.
It is the method of payment that perhaps need to be addressed.
But in any case the two related companies should have sorresponding intercompany accounts (debtor on one and creditor on another. I think this would keep things clearer. IMHO Posting a journal will make the transactions harder to trace.
