VAT Problem QB Pro 2005

I take it that you would like to move from doing your VAT returns manually to letting QB do them for you.

You don't say how your partial exemption works. Can you not just show the VAT rate as 0% on:

1. Non-vatable supplies, and

1. Purchases where you cannot claim an input credit?

If you can, then QB can easily take over from you the drudgery of preparing your VAT returns. All you will need to do is to first bring the VAT reports back into line with the VAT control account. I explain how in what follows, at least for QB 2003 Pro UK but presumably it will also work for 2005 Pro.

If you can't classify entries as non-vatable at the time of entering them, but you want to use the VAT reports generated by QB instead of relying exclusively on the VAT control account for your manual workings, you will essentially need to follow the procedure outlined below each time you submit a return.

For the VAT reports to be correct, it is firstly necessary that you let QB generate the VAT returns so that it can flag the entries already included in previous VAT returns. You do so by going to Suppliers + VAT + File VAT. QB will also automatically generate a cheque entry for the amount payable by you in terms of the return generated by it. Or if a refund is due to you, it will generate a (fictitious) invoice for the amount of the refund. (Try sending that to the revenue authorities!) You must not generate these entries manually.

To get the (incorrect) VAT reports generated by QB back into line with the (correct) VAT control account, let QB generate your next VAT return so that it flags all entries up to the date of the return as having been included in VAT returns. Discard that return and generate a last manual return with the correct figures.

Then physically write a cheque in favour of the revenue authorities for the amount due to them in terms of your correct manual return but don't enter the cheque in QB. Of course QB now shows the amount of its incorrect cheque in both the bank account register and the VAT control account.

To rectify this, instead of using a general journal entry, enter a fictitious cheque or deposit, as the case may be, for the difference between the cheque entry generated by QB and the actual cheque, selecting the VAT control account under Account.

And voilà! QB should get the VAT reports and returns right from now on.

Ken

Ken

Thanks for your reply

I finally discovered that if I open the VAT control account register in 2 line mode I get a column for "filed" Changing that on the offending item took it out of my VAT return. But it still appears in my VAT summary report (which is what I use to calculate my partial exemption)

I have now learn't not to use Journal entries to record VAT payment or repayments.

Your method removes it from the VAT summary report too.

Thanks

Mike