I have a client who recently registered for VAT and I am ready to do the first VAT return.
I have roughly £500 worth of reclaimable VAT from before they registered and want to include that in the return.
My first thought was to journal DR VAT input CR Net VAT due. That works for showing the VAT return as correct but the net VAT figure due is then wrong on the accounts - which I understand.
What do I need to do to show it right on the VAT return AND on the creditors > net vat due
If it is a fixed asset you need to also adjust the value of the asset down by the VAT being reclaimed, DR VAT inputs CR FA Asset account. This will also affect the WDA or AIA on a SA/ Corp tax tax return
If it is for stock DR VAT Inputs CR Stock, or Purchases depending when they were purchased. Make sure you use the registration date when doing the journal. If you use a date prior to the current year the previous years balance sheet is affected
This will adjust the value of the asset and add the VAT in to the VAT report.
If it is a fixed asset you need to also adjust the value of the asset down by the VAT being reclaimed, DR VAT inputs CR FA Asset account. This will also affect the WDA or AIA on a SA/ Corp tax tax return
If it is for stock DR VAT Inputs CR Stock, or Purchases depending when they were purchased. Make sure you use the registration date when doing the journal. If you use a date prior to the current year the previous years balance sheet is affected
This will adjust the value of the asset and add the VAT in to the VAT report.
HTH
Thanks for that Wella, much appreciated. Fortunately the registration date is in the same financial year.
