Microsoft Office Accounting Professional 2008

Filing and Paying VAT

VAT registered companies must file a VAT return 1,4, 6 or 12 times a year, determined by their VAT registration. This is done in Office Accounting by creating a VAT return.

VAT Return

The VAT return is created using the VAT return wizard. Click Create VAT Return in the VAT menu to start the wizard:

VAT return wizard

Click Next to start the process.

VAT liability

The first step in the VAT return wizard gives you an overview of the VAT liability report for the period you are reporting for. Double-click on any line to see the transaction details (invoices, payments etc). You can also print out the VAT detailed report to get a complete listing of all VAT postings.

Review the VAT liability report numbers. If you discover an error and need to make adjustments, click Cancel and make an adjusting journal entry (see VAT adjustments below). If everything seems correct, click Next. The following dialog will appear:

Click OK to create the VAT return. You may have to wait a few second for the VAT return to appear.

VAT return created

The VAT return wizard will now display the result of the VAT return. The amount will be identical to the amount on line 5 of the VAT liability report in the previous step. All of the information is preserved in a VAT return document (see below), which can be found in the VAT return list.

In the example above, your company is due to pay a net amount of £480.68 in VAT to HM Revenue and Customs. If you click Finish, you will exit the wizard and you can pay HM Revenue and Customs later. To create the payment for HM Revenue and Customs, click Next.

Pay VAT

The final step will display your balance with HM Revenue and Customs and the amount to pay taken from the previous step. You can adjust the total amount of your payment, if you have an outstanding balance with HM Revenue and Customs. Otherwise select the payment method and press Pay Now to create a payment to HM Revenue and Customs or click Pay Later to exit the wizard.

The payment will appear on the payment list.

Note that even though you have created a payment to HM Revenue and Customs, you still have to issue the payment.

VAT return completed

The VAT return wizard is now completed. Click Finish to exit the wizard.

The VAT Return Document

The VAT return wizard creates a VAT return.

VAT return document

The VAT return document is a document that “locks” all the invoices payments and other documents it refers to so that they cannot be voided or edited. This means that the VAT return won’t change after it has been created.

If new transactions are made in an old VAT period, they will be part of the subsequent VAT return, as prescribed by legislation.

Since the VAT 100 liability report is based on the VAT return, the reports will remain the same, and won’t change even if you create transactions in a previous VAT period.

From the Actions menu of the VAT return document, you can launch the VAT 1000 liability report, the VAT detail report and the VAT exception report pertaining to that VAT return.

If you need to make changes, you will have to void the VAT return, make your changes and create a new VAT return. If you have already submitted your VAT return, just make your changes, and they will automatically be added to the subsequent VAT return.

Paying VAT

If you chose not to create a payment in the VAT return wizard, you can create a VAT payment using the VAT menu.

VAT payment

The VAT payment is simply a payment against your balance with HM Revenue and Customs. The most common scenario is that you are paying the balance of a VAT return, but you could be paying late and thus have to pay an additional fee.

After the payment has been saved it needs to be issued.

Paying VAT on Account

The VAT payment is also used for companies that are registered on the annual accounting scheme, but since they have a turnover of more than £100,000, they have to make monthly VAT payment on account.

Simply use the VAT payment form to make monthly payments, and when the annual VAT return is created, the balance with HM Revenue and Customs will tell whether you need to pay a balance or if you are getting a refund from HM Revenue and Customs.

VAT Repayments

If you input tax exceeds your output tax in a given VAT period, you are entitled to a repayment (a refund) from HM Revenue and Customs.

The procedure for getting a repayment is as follows:

1. Create a VAT return. If the VAT return has a negative balance you are entitled to a refund.

VAT return with negative balance

2. When you receive the VAT repayment from HM Revenue and Customs, select Enter VAT repayment. This will open up the following dialog:

3. Enter the amount you have received from HM Revenue and Customs and press OK. This will create a VAT repayment document that will clear the balance with HM Revenue and Customs.

VAT Adjustments

If you need to make corrections before creating a VAT return, you can use a journal entry. The journal entry can:

• Adjust sales amounts with VAT codes and corresponding VAT amounts.
• Adjust purchase amounts with VAT codes and corresponding VAT amounts.
• Adjust input, output, EC acquisition, and EC sales VAT amounts.
• Adjust the balance with HM Revenue and Customs.

Sample adjusting journal entry