Xero - how to select the date for reclaim VAT

Xero - how to select the date for a correction for claiming VAT

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Hi guys, 

I have found a subscription expense of £100 posted by the previous bookkeeper with exempt VAT, but when I got the receipt it said 20% of the VAT (£20) included.

So I will post a manual journal to correct the expense and reclaim the overpaid VAT.

Here is the journal:

Dr VAT control account £20 (No VAT)

Cr original expense account £20 (No VAT)

I had some confusion about the date of the journal, should I post the current date or the original date for the transaction, which was within the last financial year? Also, is the journal correct for selecting No VAT and posting the net VAT figure? Thanks.

Replies (8)

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By TheTaxMan_
13th Jun 2024 12:38

I would simply change the VAT rate on the actual expense to standard. Xero will pick the change up in the next VAT return if it needs to, or it will change the amount for the current return that is about to get submitted.

Unless that period has been locked then do the day after the locked period with the journal you have suggested.

It's cleaner that way.

Thanks (1)
Replying to TheTaxMan_:
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By yanzhaohr
13th Jun 2024 12:50

Thanks, would post the first date of this financial year.

Thanks (0)
JCACE
By jcace
13th Jun 2024 12:39

What software are you using? It might not pick up your correction. Xero, for example, will not detect a No VAT entry for the VAT Return input VAT.
If the total expense was £100, the VAT content at 20% will be £16.67, not £20.

Thanks (1)
Replying to jcace:
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By yanzhaohr
13th Jun 2024 12:49

jcace wrote:

What software are you using? It might not pick up your correction. Xero, for example, will not detect a No VAT entry for the VAT Return input VAT.
If the total expense was £100, the VAT content at 20% will be £16.67, not £20.

The date question has been solved, I will post the date after the end date of the last VAT period.
For the VAT option, the scenario was,
YE for the last financial year was 31/03/24 before we used Sage, and now we are using Xero.

The amount is net £32, VAT 20% £6.4, total invoice amount £38.40.

Now I am confused about the VAT option, should I put "No VAT" for the journal, or any other options?

Thanks (0)
Danny Kent
By Viciuno
13th Jun 2024 14:49

Don't post to the VAT account, Xero wont pick this up and it's my pet bugbear as if it's not done properly it will just cause issues down the line. Compounded by lazy accountants who just accept differences.

Journal should be:
Dr **expense nominal** £38.40 20% VAT on expense
Cr **expense nominal** £38.40 Exempt VAT

£6.40 will be included as a late transaction on your next return and your nominal code will be credited by the same amount.

Thanks (1)
Replying to Viciuno:
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By yanzhaohr
13th Jun 2024 15:10

Viciuno wrote:

Don't post to the VAT account, Xero wont pick this up and it's my pet bugbear as if it's not done properly it will just cause issues down the line. Compounded by lazy accountants who just accept differences.

Journal should be:
Dr **expense nominal** £38.40 20% VAT on expense
Cr **expense nominal** £38.40 Exempt VAT

£6.40 will be included as a late transaction on your next return and your nominal code will be credited by the same amount.

Thank you so much, buddy!

Thanks (1)
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By rmillaree
13th Jun 2024 17:20

as others have said amending original entry is always the way to go if year end has not been locked.

note if you grant advisor status you will have acces to find and recode - this is the bees knees of revising stuff - if you use find and recode you can choose any number of entries and recode vat effortessley - normally you recode source entry here (doing journal which is an option is probably unecssary extra entry)

https://central.xero.com/s/article/About-Find-Recode#:~:text=Only%20use%...'t%20access,to%20use%20find%20and%20recode.

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By cinnamint
13th Jun 2024 21:37

Bit late to the party but I would post a credit note to cancel the original posting (if a bill) and re-post the bill correctly.

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