Why are my VAT accounts

[Maf. King]

On Thu 1 October 15 14:34:23 John Ralls wrote:
> > On Oct 1, 2015, at 11:45 AM, Dave H <hellvee at gmail.com> wrote:
> > 
> > Seems to be details for the UK VAT 100 quarterly tax return - example form
> > at http://blogs.thesitedoctor.co.uk/tim/img/VATReturn-FrontPage.JPG 
> > (thanks Tim)  Basically Value Added Tax collected on behalf of UK
> > Governent HM Customs and Excise - similar to GST in Australia and State
> > and Federal Taxes in the US I guess.  Boxes 1, 2 & 3 are amounts owing to
> > HM and Box 4 is VAT/Sales tax paid by you.  Box 5 is the net amount
> > payable/refundable.
> Thanks. That image led me to search for “filling in your VAT return” which
> yielded
> https://www.gov.uk/government/publications/vat-notice-70012-filling-in-your
> -vat-return/vat-notice-70012-filling-in-your-vat-return.
> 
> That makes it look like it should be reserved rather than expensed.

Hi John.

UK VAT is certainly Asset & Liability not Income/Expense. I was going to see 
if I could send you a screengrab of the form or something, but it seems I was 
beaten to it.

Notionally quarterly you have to tell HMRC how much VAT you have collected on 
those sales and the VAT paid when purchasing.  You pay (or reclaim) the 
difference.

You also have to report what your total (net, ex-VAT) sales and purchases are 
as a sanity check.

There are some slight additional steps/complications for trade with businesses 
in other EU nations, as the VAT is (usually) reported and paid by the 
purchaser. If I buy from a company based in another EU country, whose rate is 
say 23%, they bill me at net cost, and I report that and pay the 20% UK rate 
to HMRC, effectively increasing the total of my tax collected on sales... (It 
is called the Reverse Charge Mechanism, after all!)

> 
> It surprises me that this should have gone unnoticed for 8 years. Are most
> of the UK users rolling their own CoA instead of using the template?
> 
> It also doesn’t do anything to tell us why it would ever have shown up on
> the Balance Sheet instead of the Income Statement (aka Profit and Loss
> Report).

I can only speak for myself, but I rolled my own CoA, and VAT is in the 
correct places. (and it was more than 8 years ago, IIRC there was no VAT 
Template back then!)

HTH,
Maf.

> 
> Regards,
> John Ralls
> 
> 
> 
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Maf. King
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