Why are my VAT accounts

[John Ralls]

> On Oct 2, 2015, at 12:35 AM, Maf. King <maf at chilwell.net> wrote:
> 
> 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!)

Maf,

Thanks for the confirmation. I’ll revise the template to put the accounts where they belong. 

Regards,
John Ralls