Record VAT payments and refunds

Summary

How to record either the payment of VAT or the amount you reclaimed in Sage Accounting Start.

Resolution

How it works

When you enter a transaction with VAT, we update the VAT on Sales or VAT on Purchases ledger accounts, depending on whether it is a sale or a purchase. This tells you the total amount of VAT from your sales and purchases.

When you submit a VAT return, we transfer the amounts from the VAT on Sales and VAT on Purchases ledger accounts to the VAT Liability ledger account, to tell you how much you owe to HMRC. The balance of the VAT on Sales and VAT on Purchases is now zero.

When you pay your VAT return, we update the VAT liability ledger account with the amount of the payment. When you have fully paid your VAT, the balance of the VAT liability is zero.

Learn more about clearing the VAT liability account.

You can record your VAT payment or refund in a few different ways:

Use the Pay or Reclaim button from the VAT Return
Match the payment or refund from a bank feed
Record a VAT payment without a corresponding VAT return

Record VAT payment from the VAT return

From Reporting, select VAT Returns.
Choose the VAT Return you want to pay.
Select Pay, then enter the amount, date and the bank account you paid from.
Select Save.

Once saved, the VAT Return shows as Paid. If you didn’t pay the full amount, it shows as Part-paid. We also update the VAT liability ledger account. If you pay or reclaim the amount in full, the balance will be zero.

Reclaim your VAT from the VAT return

If you are due a VAT refund, the button will show Reclaim by default. Enter the amount that you have received from HMRC.

From Reporting, select VAT Returns.
Choose the VAT Return you want to reclaim.
Select Reclaim, then enter the amount, date and the bank account the money was paid into.
Select Save.

Once saved, the VAT Return shows as Paid. If you didn’t reclaim the full amount, it shows as Part-paid. We also update the VAT liability ledger account. If you pay or reclaim the amount in full, the balance will be zero.

Match a VAT payment or refund from a Bank Feed

If your bank is connected to a bank feed, it's likely that your VAT payment or refund will show in your incoming transactions.

We recommend that you:

Follow the steps above to record your payment or refund from the VAT Return.
Match your incoming payment or refund to the payment or refund already created from the VAT Return.

Match the payment or refund from your bank feed

From Banking, open the relevant bank account.
Select the Transactions link to find transactions downloaded from your bank.
Find the VAT payment or refund.
Choose Match. Select the VAT payment or refund you entered above. The type shows as VAT Payment.
Select Match.

You’ve successfully matched your VAT payment or refund.

Record a VAT payment without a VAT return

This explains how to record a VAT payment or refund to HMRC when you don't have the corresponding VAT return in Sage Accounting. This may happen when you first move to Sage and have submitted the VAT return from different software.

To do this, enter an Other Payment and or Other Receipt and choose the VAT liability ledger account.

Remember when you record your VAT payment or refund this way, we do not match it to a VAT return.

Make the VAT liability ledger account visible

Before you start, make sure you can select the VAT Liability ledger account on Other Payments and Other Receipts.

From Settings, choose Business Settings.
From the Financial Settings section, choose Chart of Accounts.
Select the row for the VAT liability ledger account.
From the Visibility section, make sure Other Payment and Other Receipt are selected.
Save.

Record the VAT payment

From Banking, open the relevant Bank Account.
Choose New Entry, then Purchase/Payment. Select Other Payment tab.
Enter the date and amount for the VAT payment.
From the ledger account drop-down, choose the VAT Liability ledger account.
Select Save.

Record the VAT refund

From Banking, open the relevant Bank Account.
Choose New Entry, then Sale/Receipt. Select the Other Receipt tab.
Enter the date and amount for the VAT refund.
From the ledger account drop-down, choose the VAT Liability ledger account.
Select Save.