File and pay VAT

Applies to:     Office Accounting Express, Office Accounting Professional

VAT registered companies must file a VAT return each month, each quarter, twice a year or once a year, depending on their VAT registration. This is done in Microsoft Office Accounting 2008 by creating a VAT return.

VAT Return wizard

The VAT return is created using the VAT Return wizard.

  1. To start the wizard, on the Company menu, point to VAT and then click Create VAT Return.

    file and pay vat

  2. Click Next to start the process.

    file and pay vat

  3. The VAT Return wizard provides an overview of the VAT Liability report for the period you are reporting for. Double-click any line to see the transaction details (such as invoices or payments). You can also print the VAT Detailed report to get a complete listing of all VAT postings.

  4. Review the VAT Liability report numbers. If you discover an error and need to make adjustments, click Cancel and make an adjusting journal entry. (For details, see "VAT adjustments" later in this topic.) If everything seems correct, click Next. The following dialog box appears.

    file and pay vat

  5. To create the VAT return, click OK. It may take a a few seconds for the VAT return to appear.

    file and pay vat

  6. The VAT Return wizard now displays the result of the VAT return. The amount will be identical to the amount on line 5 of the VAT Liability report shown previously. All of the information is preserved in a VAT return document (see the example that follows), which can be found in the VAT Return List.

  7. In this example, your company is due to pay a net amount of £480.68 in VAT to HM Revenue & Customs. If you click Finish, you will exit the wizard and you can pay HM Revenue & Customs later. To create the payment for HM Revenue & Customs, click Next.

    file and pay vat

  8. This displays your balance with HM Revenue & Customs and the amount to pay taken from the previous step. You can adjust the total amount of your payment, if you have an outstanding balance with HM Revenue & Customs. Otherwise, select the payment method and click Pay Now to create a payment to HM Revenue & Customs or click Pay Later to exit the wizard.

    The payment will appear on the payment list. Note that even though you have created a payment to HM Revenue & Customs, you still have to issue the payment.

    file and pay vat

  9. The VAT Return wizard is now completed. To exit the wizard, click Finish

VAT return document

The VAT Return wizard creates a document called a VAT return.

file and pay vat
VAT return document

The VAT return is a document that locks all the invoices, payments and other documents it refers to so that they cannot be voided or edited. This means that the VAT return won't change after it is created. The following applies to VAT returns:

  • If new transactions are made in an old VAT period, they will be part of the subsequent VAT return, as prescribed by legislation.

  • Because the VAT 100 Liability report is based on the VAT return, the reports remain the same, and won't change even if you create transactions in a previous VAT period.

  • From the Actions menu of the VAT return document, you can launch the VAT 100 Liability report, the VAT Detail report and the VAT Exception report pertaining to that VAT return.

  • If you need to make changes, you must void the VAT return, make your changes and create a new VAT return. If you have already submitted your VAT return, just make your changes, and they will automatically be added to the subsequent VAT return.

Pay VAT

If you chose not to create a payment in the VAT Return wizard, you can create a VAT payment using the VAT menu.

file and pay vat
VAT payment

The VAT payment is a payment against your balance with HM Revenue & Customs. The most common scenario is that you are paying the balance of a VAT return. However, a late payment with an additional fee can also be paid.

After the payment is saved, it needs to be issued.

Pay VAT on account

The VAT payment is also used for companies that are registered on the annual accounting scheme, but because they have a turnover of more than £100,000, they must make a monthly VAT payment on the account.

You can use the VAT Payment form to make monthly payments. When the annual VAT return is created, the balance with HM Revenue & Customs will show whether you need to pay a balance or get a refund from HM Revenue & Customs.

VAT repayments

If your input tax exceeds your output tax in a specific VAT period, you are entitled to a repayment (a refund) from HM Revenue & Customs.

Use the following procedure to get a repayment.

  1. Create a VAT return. If the VAT return has a negative balance, you are entitled to a refund.

    file and pay vat

  2. When you receive the VAT repayment from HM Revenue & Customs, select Enter VAT repayment. The following dialog box opens.

    file and pay vat

  3. Enter the amount you received from HM Revenue & Customs and click OK. This creates a VAT repayment document that clears the balance with HM Revenue & Customs.

VAT adjustments

If you need to make corrections before creating a VAT return, you can use a journal entry. The journal entry can:

  • Adjust sales amounts with VAT codes and corresponding VAT amounts.

  • Adjust purchase amounts with VAT codes and corresponding VAT amounts.

  • Adjust input, output, EC acquisition and EC sales VAT amounts.

  • Adjust the balance with HM Revenue & Customs.

file and pay vat
Sample adjusting journal
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