I have my first client on the above scheme. Want to clarify how to post in the accounts so that I have the correct figures in the p and l and bal sheet as I am also doing his year end accounts. They are on a rate of 13.5%. first year discount of 1 % included.
e.g. sales £5000.00 vat £1000 total £6000
how would this be posted would it be.......please correct me if I am wrong:
Cr sales £5000
cr Vat £1000
Dr Debtors £6000
then to adjust the vat liability:
£6000 x 13.5% = £810
so dr vat £190
cr debtors: £190.00
As I said this is my first time, as I've dealt with normal vat lot's, please correct me if I am wrong.
thank you Michelle for your help, I just wanted confirmation really on it, and yes I see what you mean it's credit sales not the debtors.......I should have put that as I do bookkeeping all day long in full time job, and have done it for years now, just the sound of something new scares and confuses me a little - that's quite normal though...so thank you for correcting me! :)
changed "been doing it for year" to "been doing it for years"!
-- Edited by lor on Tuesday 16th of July 2013 07:58:11 PM
Net sales are £6k less £810 VAT, so you would credit sales not debtors, in order to increase the net value to £5190.
Lets imagine this is one invoice. The client pays you £6k, so the debtors figure would already be correct. The VAT needs to be reduced to £810, so yes debit VAT. And then the credit goes to sales. Some people like to create a special code for this VAT, and show it separately, but Ive always just shown it in sales
Hi Lor, it happens to us all! I've been doing this years, and there are still moments where I second guess myself, even if I have done something before! But at least we are vigilant and clarify before moving ahead, thats what matters :)
My client has paid himself the vat difference!, confused dot.com, I agree to post as above Michelle, and also believe he should be paying HMRC the 13.5% vat and not giving himself the difference between the 20% and 13.5% ie in the above case, £190.00.
Please correct me if I'm wrong but I don't think that he should have paid himself the difference!, as after all the postings are done there isn't an outstanding balance.
If anyone could just confirm I'm not going crazy that would be a great help!.
Many thanks lor
-- Edited by lor on Friday 19th of July 2013 05:16:43 PM
he's limited - soz, yes I thought exactly the same, as the payment is obviously credit bank, I was going to debit director's loan account, basing on my above thoughts, thanks Michelle!......
It might be an idea, when you are posting purchases invoices for the next quarter, to make a little note of all the VAT that could be claimed, and see how the liability compares?
