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Vat Sage Correction

Vat Sage Correction

Dear Members,

I need to get around this entry in Sage .

Company is on Vat Cash Accounting Scheme , I had Bank Payment recorded as Payment on Account to Supplier (using tax code T1).

Supplier Later refunded that whole amount(due to incorrect name on chq) and then we Recorded as Bank Receipts to Suspense a/c using (T9).

Please Could any body tell me How to credit the supplier again and correct input vat claimed earlier on Payment on account.

1- Supplier A/c(Dr)

Bank (cr) as Payment on A/c using T1 tax code.

2- Bank Dr (T9) code

Suspense a/c (T9).

Now i need to Credit the supplier again and correct input vat claimed as per entry 1. We are operating Vat Cash Accounting scheme ...

Your help would be appreciated .

Rehan Arain


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By Anonymous
14th Aug 2007 13:06

Sage handles OA VAT incorrectly .....
Unless it has been changed, Sage has a problem with Tax Codes and On Account Payments/Receipts - as follows:

At the time the On Account payment/receipt occurs no-one is aware of the VAT because it has not yet cystalised - however, Sage insists you enter a VAT Code at the time the On Account is put into their program

The issues are:

- On Cash Accounting, Sage seems to report the VAT at the time the On Account is entered; despite the fact that NO VAT has yet arisen. So you are accounting for 'virtual' VAT that does not exist - this is incorrect

- If you enter the wrong VAT Code against an On Account and later try to allocate the On Account to an invoice - it is impossible

Maybe things have changed since I last looked at Sage but if not then SAGE IS WRONG

Whats more - HMRC also agree that all is not right

In fact looking at the comprehensive explanation provided by Christian; this highlights the issue precisely

>>>>You paid
Dr Trade Creditors T1
Cr Cash T1 (Paid on Account)

How can you assign T1 to the On Account payment when the VAT has NOT yet arisen - OR perhaps others know better ?

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By brucier
13th Aug 2007 19:26

Forgive me but....
I've used sage for a while now and the easiest way would just to delete the POA and re-post the fresh entry using the new cheque number as a cross reference.

I know that some people like to show the full audit trail (cheque issued incorrectly - cheque returned - cheque reissued correcty), however as long as all the corections are made within the same Vat Q, then I see no reason why all the entries have to be made.

Hope that this helps.

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13th Aug 2007 19:45

The way I would do it.
>>>>You bought some goods
Dr Purchases T1
Cr Trade Creditors T1

>>>>You paid
Dr Trade Creditors T1
Cr Cash T1 (Paid on Account)

>>>>Supplier refunded you (Issued a Credit Note?)
Dr Cash T9 ****(You made the mistake here)****
Cr Suspense A/C T9 ****(You made the mistake here)****

My suggestion to correct:
Post a dummy manual invoice with same details and tax code T9 on the supplier account to the Suspense A/C.
Dr Suppense A/C
Cr Cash to pay that dummy invoice with a T9 tax code.

You have in effect cancelled the mistake previously made.
Now re-post the dummy transaction and payment again with the tax code T1

If you have returned the goods, I think you should post the credit note to the Purchase a/c.
But if the purchase still stands you can use the suspense account for the refund. Don’t forget to use T1 this time!

Let us know how you are getting on.


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By Rehan1
13th Aug 2007 21:12

Thanks Chriatian

I have raised Dummy invoice to supplier acount ..

Dr Suspense a/c

Cr supplier a/c ....... it does not allow me to post to Bank a/c through supplier ledger or supplier a/c.

I am just worried about the Input vat claimed on earlier as Paymnt on a/c. how shoul i correct it.

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