[GNC] UK VAT and "Making Tax Digital"

[Maf. King]

On Wednesday, 1 May 2019 01:14:34 BST you wrote:
> Oops realised that recording the capital purchase as expense then
> immediately create a kludge txn from expense to capital-asset won't work:
> it would be classed as a 'refund'. I have no other workaround.
> 
> Just wondering what exactly are the parameters for your reports?
> 

Ah, yes. that won't work!

I need to understand the Australian page more fully, but in the UK every VAT 
transaction *has* 3 or more spilts - eg Bank, Expenses:Widgets 
Asset:CapitalEquipment:WidgetSharpenerTool and VAT:Box4  

I'd imagine, without much detailed thought, that the GST report might struggle 
if a COGS account were ever involved too?

The UK VAT return needs 7 numbers.  

Box 1  : VAT Due on sales & other outputs
Box 2: Reverse VAT due on purchases from the EU
Box 3 is the sum of box 1&2 - Total VAT Due 
Box 4  Total VAT claimed on inputs - inc. EU purchases reverse VAT
Box 5 is return total ie Box 3 - Box 4 

My CoA has a sub tree called VAT (type Liability), under which there are 3 
accounts, for Box1, Box2 (both type Liability) and Box4 (type asset)

I don't do EU purchases very often, so I have done box 2 manually.
My current saved reports for Box 1 & 4 are simply transaction reports on the 
relevant VAT collection accounts, with a filter to exclude the actual VAT 
payment to the government that happens each quarter (is box 1 report has a 
single reporting account, and filter account excludes box4)

The more cumbersome boxes on the VAT return are 6 - 9.

Box 6 is Total ex VAT sales & outputs (inc box 8 subtotal)
Box 7 is Total ex VAT purchases & inputs (inc Box 9 subtotal)
Box 8 is supplies of goods ex VAT to EU member states (ie 0% VAT)
Box 9 is purchases of goods ex VAT  from EU (ie reverse VAT)

Box 6 & 8 is a transaction report produced from the relevant Income Accounts.  
I use the subtotal of the Income:EU_Reverse_VAT account for box 8 and the final 
total gives box 6

Box 7 is a transaction report across Assets:Capital Equipment and the relevant 
accounts from the Expenses Tree.   

I've done Box 9 manually by looking at the transaction report for box 2, with 
all splits showing.  My CoA is probably sub-optimal for reporting on EU 
purchases, but they are so infrequent for me that I've used the manual method 
perhaps twice in 3 years.

When I first set GC up for VAT, I was guided by a post from Vincent V to the 
User list on 2003-07-21 at 12:44 CDT that might offer you some insight. 

I can't see a way to not include the capital assets accounts in the reports.  
The whole point of the MTD is to remove the manual steps from the loop and 
keep everything in the computer.  

Let me know if you need any more info.  As I say, my VAT is not as complicated 
as others might have as most of my trade is within the UK, with a few sales of 
goods to EU member states and even fewer purchases from there.


Thanks for your time on this,
Maf.