Hi - I have recently realised that insurance provided by a third party is subject to VAT, and as a result of this I have some VAT to reclaim from earlier years as I previously thought that all insurance was VAT exempt (my client is invoiced for his buildings insurance by the landlord).
I have read the HMRC guidance on the correction of mistakes on earlier VAT returns and have adjusted my VAT return on Sage by increasing the amount reclaimed on purchases, but I am now left with a credit on the input VAT account on the balance sheet. Does anyone know where I would post the corresponding double entry to in the profit and loss account?
Just a quick question.....did the landlord charge VAT on the invoice for buildings insurance? i.e. did he show the VAT on his invoice? Is the landlord VAT registered?
Hello Catherine It might well be that the landlord was not VAT registered in earlier periods (maybe not up to the threshold) - so its probably worth checking that out first.
Not sure about Sage - have you effectively altered the earlier transactions through the maintenance screen to show as 'calc' net (rather than added it on to existing invoice amount)?
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Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
Hi - I haven't done any corrections on SAGE apart from altering the VAT return to claim back the input VAT that should have been claimed in earlier years. This has had the effect of leaving me with a balance on the input VAT account.
In earlier years, the effect of not claiming back the input VAT obviously meant that we overstated our insurance costs so the logical place to post the credit to (it seems) is the insurance account so that our insurance costs are lower this year.
The amount is only just over £100 so its not a major issue - I just like things to be right
