Hi. I wonder if anyone can clarify this for me. My company is not VAT registered as providers of child daycare are not allowed to charge VAT. However most of the suppliers invoices have VAT charged on.
Question. When entering purchase invoices with VAT I split Gross into Net and VAT as per invoice. Am I doing it wrong? Should I not bother with VAt at all and enter T9 in VAT and Gross in a net?
Bother! I have now entered 7 months worth of transactions. Really wouldn't want to correct them all manually. Is there any other way of doing it please. Appreciate your advice.
Export the transaction list from the financials screen into excel. Manipulate the data in excel to get the total vat per expense nominal code. Journal the total amounts from the vat code to each expense code.
Can I just make a note for an accountant to ignore Purchase Tax control when doing Year end accounts. I think it is the gross amount that is shown P&L list, isn't it?
Ok I need to sort this mess then. Could you please help. I understand I need to get figures for total vat on each N/C account. The total VAT for all purchase transactions at the moment shows on Purchase Tax control account. What do i do next?
As you've realised, you need to journal the amount on the Purchase Tax control account back to each respective nominal.
The easiest way (for me, anyway) would be to do the calculation in excel, which is why I suggested that you export the financials into excel. Once the raw data is in excel, a sumif formula or a pivot table would do the trick, but there are other ways, too depending on your excel skill.
The worst case scenario would be to let the accountant do it (which may add a bit onto the year-end fee, though), it wouldn't be the first time a client has done this...
Ok say I have £24000 on a Purchase Tax control account and 3 nominal codes 5004-£8000, 5005-£3000, 7502-£1200. I will credit £24000 to PTC account and debit respective amounts which should "0" VAT and increase value of respective nominal codes. But aren't the amounts on these codes are already Gross figures? Sorry for digging but really want to get this right as might use this advice for later and I am sure I am not alone here.
No, the amounts on the respective nominal codes will be net figures (which is why the P&L would also be in net figures, as Semsley said, above) Bear in mind that, unless you've accounted for VAT on absolutely everything (possibly unlikely?), there will be some transactions that had no VAT, so you can't necessarily apply 20% to the total balance/amount on each nominal code (if you see what I mean). Hence my previous comments about doing the analysis outside of Sage, to see which transactions had VAT.
Yes I understand. There aren't that many in fact. I will as you suggested manipulate excell data to get totals of VAT for suppliers that charge 20% VAT and leave out those who are on T0. Almost all bank payments for cash sales (not bank suppler payments) are non-VAT either. One more question if you don't mind.
As from last week I am T9-ning all the new transactions. Though we have suppliers who do not chatge VAT and previously i would be inputting them as T0. Can I just leave them as they are. Or do I have to correct VAT codes to T9 anyway.
Having them as T0 with a zero VAT amount won't really make any difference to your accounts.
(Although, after you've finished sorting it all out, you *could* run a VAT return, which should be nil overall - or be opposite to the VAT correcting journals you have done - and reconcile the VAT transactions on Sage, just in case, in the future, you change business and become VAT registered, so all the T0 transactions aren't all picked up on a future VAT return)
