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Sage VAT Return Query

We have a VAT registerd partnership and my husband also has a non VAT registered business.

I found that I made an error on an entry in the partnership accounts in December 2009. I entered an invoice that should have been for my partner's non VAT registered business and reclaimed the VAT on it which was £92.66. The entry (trans 92) was included in the VAT return dated 31st January 2010 and VAT reconciled. It had been paid in error out of the partnership bank account.

When I noticed the error recently, I corrected it in the Maintenance, Corrections window, changing the nominal code to Drawings (3201) and changed the VAT code to T9. This created trans 742 which was a counter BR with the same VAT and nominal code as the original BP.

The new BP created by Sage when I performed the correction has a T9 VAT code and nominal code of 3201.

When I calculate the VAT return dated 31st October this year and agree when asked to include the transactions from an earlier period, Box 6, Total Value of Sales excluding VAT is higher than we believe our sales figures should be. When I drill down in Box 6, Total Value of Sales, excluding VAT I see that trans 742 is listed (under the old T3 code which I used for 15% VAT that was applicable at the time of the transaction).

I understand why the VAT payable would be £92.66 higher as I have claimed this in error and must repay it but I don't understand why the Sales figure is higher than our actual sales for the quarter.

I have also noticed that a refund where VAT was paid back is included in the Sales Total. It has a nominal code of 6900 miscellaneous expenses. I expected only those nominal codes which we use for Sales (4000 and 4001) to be listed when drilling down to the VAT Breakdown from Box 6.

I'm hoping someone can explain why Sage includes these transactions when it calculates the Total Sales figure and whether I should go ahead and process the VAT return or if I've made some sort of mistake.

Thanks.

I'm a new member so if I've posted this on the wrong forum, please accept my apologies.

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By ChrisDL
29th Nov 2010 11:50

It's because it is a receipt.

I have been caught by this one myself - the reason you have a an adjustment is because the error correction routine generated a receipt to contra your original payment (the BR posting).

That receipt had a T3 tax code and so falls to be included in the return you are working on (and you need it to be for the VAT liability to be right). Unfortunately because it is a receipt (as Sage sees it), you get two effects when the return is calculated.

- The £92.66 is shown as output VAT (because it was a receipt)

- The box 6 figure goes up for the same reason.

As the adjustment really relates to input tax in your case, I would take the Sage figures and show the output tax and Box 6 figures as the actual sales and vat figures for the quarter and then deduct the £92.66 from input tax and reduce the Box 7 figure by the net amount of the error

Hope this helps

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By FiFiFu
29th Nov 2010 20:03

Help Please!

Am I understanding you correctly that I should reduce the Box 1 (VAT due on Sales...) and Box 6 (Total Value of Sales...) to match the exact figures for this quarter and then reduce Box 7 (Total value of purchases...) by £92.66?  In short, reclaim less VAT than I would normally be entiteld to in this quarter?

In my panic to submit the VAT return in time, I have submitted it using the Sage VAT return figures as described in my earlier post but I would like to know what I should do if the situation arises again.

Will it cause a problem by my submitting with the figures mentioned?  Should I make any sort of adjustment in the next VAT quarter?

Your help is very much appreciated.

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By ChrisDL
29th Nov 2010 21:02

Sorry for confusion

I'm sorry if I confused you - I was interrupted mid way through my answer.

What I meant was that you should:-

Box 1 and Box 6 should be as you say - the right figures for sales and output VAT.

I meant you to reduce box 4 (input tax) by £92.66 so as to adjust the error and then reduce Box 7 for the net amount.

You have done the right thing by submitting the VAT return - I am sure you have all the documents to prove what you have done and that is all you will need to have if you do get a query.

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30th Nov 2010 10:41

The net VAT will be right

Sage has just increased sales instead of decreasing purchases.

Just leave it now.

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