Solution Properties
Solution ID:
222001000100569
Last Modified Date:
Fri Aug 25 13:01:41 UTC 2023
Taxonomy Path:
Case category//How do I...//governmental/legislative compliance
Author:
[email protected]
VAT Ledger Movement
Description
Cause
Resolution

Every customer and business is different in many ways, one of which is how they use nominal ledgers when recording entries in their accounts. Unfortunately, we are unable to provide advice on which ledger accounts to use within Accounting. This article is just for guidance purposes to explain how VAT moves between different nominal ledgers when using the default VAT ledgers within the software.

Depending on the VAT Scheme that you have selected within Accounting can mean that the movement between ledger accounts can differ. The below explains the main differences between Standard VAT and Cash Accounting.

Standard VAT

  • On this scheme you are liable to pay/receive the VAT at the point you generate an invoice, it doesn’t matter if the invoice is paid or not.
  • When you create a sales invoice the VAT goes to the nominal ledger account ‘2200 VAT on Sales.
  • VAT on Sales stays in 2200 until the you create a VAT return for the period those invoices are in.
  • Once you create a VAT return for that period VAT on sales moves from ledger account 2200 to ‘2202 VAT owed To/From HMRC’.
  • If you make any Adjustment/Correction after creating the VAT return that Adjustment/Correction will be logged in the nominal ledger account ‘2203 VAT Allocations & Adjustments’.

Cash Accounting

  • On this scheme you are not liable to pay/receive the VAT when you create an invoice, it’s only when the invoice is paid.
  • When you create a sales invoice the VAT goes to the nominal ledger account ‘2204 VAT on Sales Holding Account’.
  • VAT for paid sales invoices stays in 2200 until you create a VAT return for the period those invoices are in.
  • Once you create a VAT return for that period VAT on sales/purchases moves from ledger account 2200 to ‘2202 VAT owed To/From HMRC’.
  • The VAT amount stays in holding accounts until the invoices are paid. Once a sales invoice is paid, the VAT for that sales invoice moves from holding account to the nominal ledger account ‘2200 VAT on Sales’.
  • If you make any Adjustment/Correction after creating the VAT return that Adjustment/Correction will be logged in to ledger account ‘2203 VAT Allocations & Adjustments’.
[BCB:299:UKI - Personal content block - Dane:ECB]
[BCB:300:UKI - Search override - Start UK:ECB]
[BCB:276:UKI - hide back button:ECB]
Steps to duplicate
Related Solutions

How do I clear the value on my VAT control account?

Control account warnings when posting journals.