How journal entries affect the VAT Return

Learn about the impact of journal records on your VAT reports in Sage Accounting.

Journal entries move values between ledger accounts. By default, they don’t affect your VAT Return.

Selecting Include on VAT Return when you add a journal, updates your VAT Return based on the ledger account.

The following table shows which VAT Return box updates when you enter a journal.

Ledger Account	Default Nominal Code	Credit or Debit	Affects the VAT Return
VAT on sales	2200	Credit	Increases Box 1
VAT on sales	2200	Debit	Decreases Box 1
VAT on purchases	2201	Credit	Decreases Box 4
VAT on purchases	2201	Debit	Increases Box 4
Any income account	4000 to 4940	Credit	Increases Box 6
Any income account	4000 to 4940	Debit	Decreases Box 6
Any expenditure account	5000 to 9999	Credit	Decreases Box 7
Any expenditure account	5000 to 9999	Debit	Increases Box 7
Any other ledger account		Credit	Increases Box 6
Any other ledger account		Debit	Increases Box 7

If you use the Flat Rate VAT scheme, journals:

• Don’t affect Box 1, because we calculate VAT due as a flat percentage of sales
• Don’t affect Box 4, because you can't recover expenses
• Don’t support transactions outside the flat rate scheme

Related articles

• Create a journal
• Edit a journal
• Copy a journal