Reclaim VAT at the standard rate

Using the Fixed Asset Register

Use the Disposal option in the fixed asset register using the tax code T25.

Do not use T1, if you do, the VAT appears on you VAT Return for both standard rate and flat rate.

Post the entries manually

These steps are based on the following example:

• A vehicle which was originally purchased for £2,000
• Depreciation to date is £116.69
• The asset is sold for £1,200

1. Click Nominal codes then click Journal entry.
2. Enter a reference, date and the following journals.
   
   To transfer the original purchase price from the asset nominal code, post the following:

   N/C	Name	Details	T/C	Debit	Credit
   0050	Motor Vehicle	Disposal	T9		2,000.00
   4200	Sales of Assets	Disposal	T9	2,000.00

   
   To transfer the accumulated depreciation to date, post the following:

   N/C	Name	Details	T/C	Debit	Credit
   0051	Motor Vehicle Depreciation	Disposal	T9	116.69
   4200	Sales of Assets	Disposal	T9		116.69

3. Click Save then click Close.
4. To record the proceeds from the sale, click Bank accounts then click Bank receiptt and enter the following details:

   Bank	Date	Ref	N/C	Details	Net	T/C	Tax
   1200	Date of the disposal	Disposal	4200	Disposal of asset	1000	T25	200

5. Click Save then click Close.

You've now posted the entries to record the disposal of the asset. When running your VAT Return, £200 will appear in Box 1 and £1,000 in Box 6.

Reclaim VAT at the flat rate

When disposing of an asset, if you only want to reclaim VAT at the flat rate, you should post the journals manually.

NOTE: Do not use Fixed asset register, if you do, the VAT appears on you VAT Return for both standard rate and flat rate.

These steps are based on the following example:

• A vehicle which was originally purchased for £2,000
• Depreciation to date is £116.69
• The asset is sold for £1,200

1. Click Nominal codes then click Journal entry.
2. Enter a reference, date and the following journals.
   
   To transfer the original purchase price from the asset nominal code, post the following:

   N/C	Name	Details	T/C	Debit	Credit
   0050	Motor vehicle	Disposal	T9		2,000.00
   4200	Sales of assets	Disposal	T9	2,000.00

   
   To transfer the accumulated depreciation to date, post the following:

   N/C	Name	Details	T/C	Debit	Credit
   0051	Motor vehicle depreciation	Disposal	T9	116.69
   4200	Sales of assets	Disposal	T9		116.69

3. Click Save then click Close.
4. To record the proceeds from the sale, click Bank accounts then click Bank receipt and enter the following details:

   Bank	Date	Ref	N/C	Details	Net	T/C	Tax
   1200	Date of the disposal	Disposal	4200	Disposal of asset	1000	T1	200

5. Click Save then click Close.

You've now posted the entries to record the disposal of the asset. When running your VAT Return, £60 will appear in Box 1 and £1,000 in Box 6.