The VAT Wizard

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This section will show you how to use the VAT Return Wizard to calculate the VAT for reporting on the VAT Return.

Introduction to the VAT Wizard

We will also look at reports that can be generated to assist managers in highlighting and reviewing transactions that affect the reported amounts.

You may produce VAT reports using either the CASH or ACCRUAL tax method.

  • The VAT Return Wizard gives a view of the overall tax position for any specified period.  The different sections correspond with the different sections of a standard VAT form. The VAT Return Wizard provides a good method for reviewing the VAT position, and producing the VAT Summary Report.  You may also drill down to detailed reports from the VAT Wizard and these can be used as work papers to support the VAT Summary Report when reviewing the transactions contained within a VAT reporting period.
  • Upon completion of the VAT Wizard, it is necessary to record the appropriate transactions in the accounts to reflect the submission of the VAT 100 to HMRC.
  • To record the payment due from HMRC for the input VAT amount, we need to create an accounts receivable entry due from HMRC and an entry to reduce the VAT liability that has accrued during the period.  The next step would be to receive the payment from HMRC as, effectively, a post-appointment debtor.
  • This section describes how to enter both VAT Receivable and VAT Payable transactions, resulting in a net refund of VAT.
  • To record the net repayment due from HMRC, both the output and input VAT must be entered so that the VAT Control account is correctly updated.  Therefore, as this will be a net repayment, we need to create an account receivable entry.
  • This section shows how to record a net payment due to HMRC.
  • There are circumstances under which VAT will not be recoverable.  In order to clear the VAT control account, a journal entry must be created to move the balance to the VAT Irrecoverable account.
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