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

andy.partridge |
andy.partridge's picture

You should also ensure ...

Old Greying Accountant |
Old Greying Accountant's picture