Hi all - i'm using Sage Instant Accounts and doing my first Vat Return. I paid the commission vat on a sale and need to reclaim it but because it was entered as a sales credit to balance everything it is reducing my vat reclaim on the vat return. Do i have to manually adjust this or is there a journal or something i can post to sage?
To be specific when we sell animals off the farm we do so through a market and they charge us commission + vat on the sale. To record this on sage i raise an invoice on the sale amount and then a credit note against the commission and vat. When i run the vat return sage takes off the vat amount when i need to claim it back.
Thanks. Now do i do a manual adjustment or is there a journal i can post so that when i run the vat return on sage it will add the vat to my reclaim rather than take it off.
Lets say the commissions the quarter you are doing, amounted to £1000 + £200 VAT
Currently this £200 vat is being show as a reduction to sales vat.
Creating a £1000 + vat sales invoice would put the output vat back to normal, and correct the net sales
Creating a £1000 + vat purchase invoice would correct the input tax and the net purchases
Post the £1000 nets to suspense, so they contra each other
Dummy bank account shows a customer receipt and a supplier payment for the same amount - making it NIL and the £1200 in both creditors and debtors get cleared too.
-- Edited by FoxAccountancyServices on Saturday 13th of July 2013 12:13:07 PM
-- Edited by FoxAccountancyServices on Saturday 13th of July 2013 12:13:51 PM
If you raise a sales credit note on sage, to account for the commission cost, it will reduce your sales VAT instead of increasing your purchase VAT, so yes, you will need to make a manual adjustment on the face of the return, increasing the sales VAT and increasing the purchase VAT (same for the net figures) - which of course, has no effect on the liability.
Personally, I would issue a full sales invoice and a full supplier invoice and then clear them using a dummy bank account. The balance on that dummy bank account, should then equate to what gets paid into your actual bank - meaning you can do one bank transfer from the dummy account to the current account.
To correct this VAT quarter, you could post a customer invoice and a supplier invoice, for the same amounts (these would equal the net, and the vat, that you would need to manually adjust) Clear both through a dummy bank account, which will clear your debtor and creditor and bring that dummy account to NIL.
Michelle - if i had originally raised a sales invoice for the gross amount, a purchase invoice for the commission + vat, a contra and a receipt for the difference would this have worked? Unfortunately i can't do contra because i use Sage Instant Accounts but may consider upgrading in future if i will need this method to record this type of transaction.
If you had the facility to contra a PI against a SI, that would be great, but if that's not available, the dummy bank account gets round the issue free of charge. I like to clear the SI and PI through a dummy account, so that I can quickly spot if there's an imbalance. This keeps my current account straight... but you could post straight to the current account, if you wanted to... you'd just have to be extra vigilant :)
