How to Journal Irrecoverable VAT to VAT Irrecoverable Account

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Overview

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.

How to Journal Irrecoverable VAT to VAT Irrecoverable Account

In this example, the chart of accounts is as shown below:

File:test/insolvency/150_13+VAT+Wizard/080_How+to+Journal+Irrecoverable+VAT+to+VAT+Irrecoverable+Account/VATJournal1.png

The sum of £647.38 will not be recovered.

1.    Double click on the VAT Inputs(Outputs) account to show as follows:

File:test/insolvency/150_13+VAT+Wizard/080_How+to+Journal+Irrecoverable+VAT+to+VAT+Irrecoverable+Account/VATJournal2.png

2.    Click on the [New Journal Entry] button and enter the details as follows in the journal entry dialogue box:

File:test/insolvency/150_13+VAT+Wizard/080_How+to+Journal+Irrecoverable+VAT+to+VAT+Irrecoverable+Account/VATJournal3.png

3.    Click [Save and Exit] to save the journal and return the VAT Inputs (Outputs) register showing the journal as follows:

File:test/insolvency/150_13+VAT+Wizard/080_How+to+Journal+Irrecoverable+VAT+to+VAT+Irrecoverable+Account/VATJournal4.png

Note

The VAT previously shown in this account as being available to recover has now been put to zero.

4.    Click [X] to exit the VAT register to return to the main chart of accounts which should now show an Irrecoverable VAT account containing the journalled VAT similar to the following:

File:test/insolvency/150_13+VAT+Wizard/080_How+to+Journal+Irrecoverable+VAT+to+VAT+Irrecoverable+Account/VATJournal5.png

5.    As this transaction has not impacted on the bank account in order for the entry to be reflected in an R&P it is first necessary to double click on the VAT Irrecoverable account as in the following window:

File:test/insolvency/150_13+VAT+Wizard/080_How+to+Journal+Irrecoverable+VAT+to+VAT+Irrecoverable+Account/VATJournal6.png

6.    Double click on the journal entry line and the following window appears:

File:test/insolvency/150_13+VAT+Wizard/080_How+to+Journal+Irrecoverable+VAT+to+VAT+Irrecoverable+Account/VATJournal7.png

7.    Click the Advanced button and select Flag Journal to appear on RP Abstract and then Flag Journal to appear on Statutory RP:

Click [Save and Exit] to leave this screen.

File:test/insolvency/150_13+VAT+Wizard/080_How+to+Journal+Irrecoverable+VAT+to+VAT+Irrecoverable+Account/VATJournal8.png

8.    Click on the [Reports] button and choose from the report wizard for the Receipts and Payments Abstract.:

File:test/insolvency/150_13+VAT+Wizard/080_How+to+Journal+Irrecoverable+VAT+to+VAT+Irrecoverable+Account/VATJournal9.png

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