Accounts, Tax and VAT infoblog! -

Archive for the ‘VAT tips and advice’ Category

Sage tips and advice, VAT tips and advice

August 27, 2009

Sage VAT Return Preparation Checklist

Many Sage users find preparing the VAT return each quarter a worry.  So that my clients can prepare their VAT return confidently and without making any mistakes, I prepared a straight forward checklist.  My checklist is a single page on Excel and can be printed and used each quarter to ensure things go smoothly!

Vat return for the period _______ to ________


1)      Ensure that all the bank accounts have reconciled up to the last day of the Vat period

2)      Now take a backup , the file name should include the transaction number, date and the words ‘Pre Vat return’

3)      To find the VAT function go to “Company” then “Financials” then Click the ‘VAT’ Button

4)      Enter the dates of your Vat return period, then click the ‘Calculate’ Button

5)      The number of transactions found for the VAT return will be shown

eg:  “1029 transactions found for this return

12 of these transactions are un-reconciled and before the specified period.

Do you want to include the un-reconciled transactions?   YES       NO”

If the second number is small click YES

If the second number is large : Contact Sloane Walker! or your accountant.

6)  Print the VAT return and summary

7)  Review the return for reasonableness, does it compare to the last quarter and is it in line with the VAT return for the equivalent 12 months ago?

8)  If the VAT return looks reasonable, print off the detailed VAT report and carry out a more thorough review of the entries on the return.

If the entires are correct go to step 9

9)  Now print off the Purchase and Sales daybooks for the quarter, along with the Bank receipts and payments daybooks.  This is recommended by HMRC although some businesses choose not to do this.

10)  Once the VAT return has been checked and approved for submission to HMRC -  Re-run the VAT return -  See steps 3 & 4

Then Click ‘Reconcile’           Sage will ask you ‘Flag transactions for VAT?’    Click YES

You can now enter the Sage VAT return figures onto the Green VAT return and submit this to HMRC once it has been signed (and a cheque sent if applicable).

11)  The last step to complete is to enter the VAT transfer journal:

Go to ‘Modules’ then ‘Wizards’ then ‘VAT Transfer wizard’    Click ‘YES’

Enter the last day of the VAT period and ensure that the sales tax amount and the purchase tax amount agree to the figures on the completed VAT return.

Click ‘Finish’

You have now completed the VAT return.

VAT tips and advice

June 30, 2009

How much VAT do I charge if I offer my customers a prompt payment discount?

If you offer your customers a discount if they pay you either early or promptly then it could be difficult to ensure the correct VAT is charged.  The method HMRC decided upon is to assume that where a prompt payment discount is offered, a business is to assume that ALL customers will take up this discount.

So if a five percent discount were offered for payment within 7 days rather than say 30 days, on an invoice of £100 then VAT is calculated as follows: £100 less 5% = £95 x 15% = £14.25 VAT.

The invoice total would correctly show £114.25 instead of £115.00.

VAT tips and advice

June 24, 2009

What items should I exclude from my VAT return?

When you prepare your VAT return, there are a number of different transactions that you should not include in boxes 6 and 7.

 The following transactions are outside the scope of VAT and should therefore be ignored when completing box 6, the net sales box and box 7, the net inputs box:

 Remember to exclude from Box 6 and 7 the following:

The payment of VAT to HM Revenue and Customs (HMRC)

Wages and salaries

Payments to HMRC for Tax, National Insurance contributions

Money drawn by you from the business or money paid into the business

Insurance claims received by you

Business rates and water rates

Loans repayments and loan advances

The cost of the MOT test

If you are a company you must exclude the dividends paid to shareholders

Road tax paid on vehicles

Many VAT registered business owners forget the above list and therefore I find it is really helpful to print out and keep the above simple list as a reminder.