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Accounting for HMRC VAT refund on next return

We are using Sage 50 Accounts at our firm, and the VAT return submitted for the previous quarter shows a repayment. This repayment has been paid into the client's bank account, and we have logged this under the "VAT Liability" account. When I come to process the VAT return for the quarter, the software picks up the VAT repayment and includes this into the Box 6 figure - could someone please confirm if this is correct? I feel that the VAT repayment should not be included in Box 6, as this is not income for the company. Technically, I know this makes no difference to the actual VAT liability, but I am just curious as to what should be the correct treatment for this.


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Not correct

If you amend the transaction so that it shows a VAT code of T9 it will be omitted from the return calculation. Incidentally you should check that all other transactions that are outside the scope of VAT are likewise coded as a T9 eg. wages, depreciation, paye payments etc.

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By Old Greying Accountant
01st Aug 2012 21:32

You should also ensure ...

... T9 is set to not be included on VAT Return, I have on accasion found it to be checked to be included.

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