How to correct transactions on a VAT Return in Sage Accounting.
Description
Once you include a transaction on a VAT Return, you can't delete or edit it.
Having an incorrect transaction can mean that:
- Your bank account balance is incorrect
- The balance of your customer or supplier account is incorrect
- Your VAT Return has incorrect figures, and you'll overpay or underpay VAT
To correct an error on your submitted VAT Return, reverse the transaction. Then re-enter it with the updated details.
For transactions included on draft VAT Returns, delete the draft VAT Return. You can then amend or delete the transaction.
Resolution
▼ See an example
You enter an Other payment for £120 for some office supplies twice by mistake. Your last VAT Return included both transactions.
- Your bank account balance is now £120 less than it is in real life
- You've declared an extra £20 on your VAT Return
- When you report on office supplies purchases, it's £100 more than expected
To make sure your bank account and VAT Return are correct, you enter an Other Receipt to reverse this. You use the same date, amount, ledger account and VAT rate.
- Your bank account balance increases by £120 and is now correct
- Your next VAT Return gets adjusted by £20
- Your office supplies are now £100 less and are correct
NOTE: Any corrections that you make will appear when you create your next VAT Return.
Which transaction to use
- Reverse an other payment with a refund
- Reverse an other receipt with a refund
- Reverse a supplier payment with a supplier refund
- Reverse a customer receipt with a customer refund
- Reverse a refund with a payment on account
- Reverse a bank transfer with another opposite bank transfer
▼ Reverse an other payment To make the necessary adjustments
- Create a refund to reverse the receipt - This creates an opposite transaction
- Re-enter the transaction with the correct details, if required
Once saved, the refund shows on your next VAT Return, reversing the original receipt.
- From Banking, choose the relevant bank account.
- Select New, then Sale / Receipt.
- Choose the Other Receipt tab, then the Enter a refund for a purchase link.
- Enter the details of the transaction you want to reverse.
▼ Reverse an other receipt To make the necessary adjustments
- Create a refund to reverse the receipt - This creates an opposite transaction
- Re-enter the transaction with the correct details, if required
Once saved, the refund shows on your next VAT Return, reversing the original receipt.
- From Banking, choose the relevant bank account.
- Select New, then Purchase / Payment.
- Choose the Other Payment tab, then the Enter a refund for a sale link.
- Enter the details of the transaction you want to reverse.
▼ Reverse a supplier payment - If the payment is paying an invoice, unallocate the payment first. The payment then becomes a payment on account.
- Create a refund with the same details as the payment.
- Allocate the refund to the payment on account.
▼ Reverse a customer receipt Do this when you use the Cash Accounting VAT scheme, and you've included the receipt on a submitted VAT Return.
The refund clears the value from your customer account and bank account. It also updates the VAT Return. The sales invoice now shows as Unpaid.
- If the receipt is paying an invoice, unallocate the receipt first. The receipt then becomes a Payment on account.
- Create a refund with the same details as the receipt.
- Allocate the refund to the payment on account.
▼ Reverse a refund If you use the Cash Accounting VAT scheme, and the refund is on a submitted VAT Return, you can't edit or delete it.
Enter the reverse transaction to clear the value from your customer / supplier account and bank account. This also updates the VAT Return.
Reverse a refund allocated to a credit note
As you can't delete or unallocate the refund, you reverse the value of both the credit note and the refund. Create a new invoice and a new payment with the same date, bank account, amount and ledger account.
This removes the refund from your bank account balance and updates the balance on your customer or supplier account. It also updates your VAT Return.
- Create a new invoice with the same date, ledger account and amount as the credit note. This reverses the credit note.
- From Purchases / Sales, choose Purchase / Sales Invoices, then New Purchase / Sales Invoice
- Enter the details identical to the original credit note, and Save
- Pay the invoice. This reverses the refund.
- Once you've saved the invoice, choose Record Payment. Make sure you select the same bank account
- Enter a new credit note and refund with the correct details.
Once saved
- The new payment shows on your bank account, cancelling out the value of the refund
- We recommend that you reconcile the new payment straight away. This is to make sure your balances are correct before your next bank reconciliation
- The invoice and new payment show on the customer or supplier account, cancelling out the refund and credit note
- The new transactions report on your next VAT Return, cancelling out the previous refund
- Enter a new credit note and refund with the correct details
Reverse a refund allocated to a payment on account
As you can't delete or unallocate the refund, you must reverse the value of the refund. Create a new payment / receipt with the same date, bank account and amount. This updates the balance of the bank account, the balance of the customer / supplier account and the VAT Return.
- From Banking, open the correct bank account.
- Select New Entry, then Purchase / Payment or Sales / Receipt.
- Select the Supplier Payment or Customer Receipt tab. Enter the customer or supplier, bank account, payment method, date, amount and VAT rate. This must be the same details as the original refund.
-
Choose Save and select Yes to save as a payment on account.
Once saved:
- The new payment or receipt shows on the bank account, cancelling out the value of the refund. We recommend you reconcile the new payment / receipt straight away. This is to make sure your balances are correct before your next bank reconciliation
- The new payment / receipt gets reported on your next VAT Return, cancelling out the previous refund
▼ Reverse a bank transfer Here you simply enter the transfer in reverse. This cancels out the original transfer. You'll still see both transfers in your bank reconciliation and Activity list.
- Go to Banking, then select New, and Bank Transfer.
- Enter details of the transfer.
Paid from Bank Account - the account that received the transfer.
Paid into Bank Account - the account that sent the transfer.
Date Transferred.
Amount Transferred. - Click Save.
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