Vat calculation in SAGE Instants

catja

How does sage instants work. I have a sales tax contol account and a purchase tax control account and a vat liability account - okay fine but what is the VAT liablility account calculating? I seem to have a very strange figure in there at the moment?

Poodle

Hi catja

On Sage

2200 = Sales Tax Control or Output VAT control.
2201 = Purchase Tax Control or Input VAT control.

You will not be able to post anything directly to these control accounts.

2202 = VAT Liabilites and this is your VAT control account and should be the amount of VAT owing or due to be repaid once you have processed your VAT return, or submitted any error declarations etc.

If you are running accruals VAT scheme then at the end of the quarter the amount of output vat on the VAT100 that you generate (box 1) should be the same as 2200. input VAT (box 4) should be the same as 2201.

Run and reconcile the VAT return through financials as usual and then process the VAT transfer wizard. This will journal the balances on 2200 and 2201 to nil and put the difference into 2202, your control account that should then = box 5. When you pay or receive your VAT for the quarter post to 2202 to take this to nil.

If you are running the cash accounting scheme then the balances on 2200 and 2201 will not go to nil when you run the journal wizzard, if you owe or are owed monies at the quarter end. The balances will be the amount of VAT on the invoices owed or owing.

But when you process the VAT journal then 2202 will again/should equal box 5

If 2202 does not reflect the transactions that I have said then that would suggest mispostings, and you will have to print off and reconcile back to your VAT returns.

Poodle

Jan

Catja, Sage Instant doesn't have the wizard that poodle is referring to (at least I can't find it on my version). You have to make the journal entries yourself. It could be this has not been done in the past and the entries in 2202 = the VAT payments made/received via the Bank each quarter.

My predecessor never used journals - 2202 was only cleared out by the accountant making year end adjustments.

catja

Ah, so the VAT liability account is not automatically calculating it for you?

I have something like 2,300 in input control account, 3,500 in sales control and currently a liability of 5.08.!

So, and sorry already for sounding thick, are you sayng you have to manually journal the difference into the VAT liablility account and manually journal out the sales and purchase control accounts? And now I am going to sound super thick as I haven't thought this through - but where are you journaling the control accounts?

Jan

The amounts in your control accounts should agree with the figures on the VAT return at the end of each VAT 1/4 as Poodle explained. So Box 1 VAT due = balance of 2200 Sales Tax Control and Box 4 = balance of 2201 Purchase Tax Control. The difference is the amount due or reclaimed ie Box 5.
For instance:-
VAT return for 1.12.07 - 29.02.08
VAT due on Sales = £5730 Balance of control acc @ 29.02.08 £5730 Cr
VAT due on Puchases = £3077 Balance of control acc @29.02.08 £3077Dr
VAT liability = 2653

Journal would be Dr £5730 2200
Cr £3077 2201
Cr £2653 2202

Bank payment would be entered as £2653 to 2202. The double entry will be Cr Bank £2653 Dr Liability £2653 - this is what you have done when you enter the bank transaction.
You need to clear the control accounts each 1/4 so they will agree at the end of the next 1/4. If the figues you are quoting are the balances now and you are reconciling the VAT return for say end of Feb they won't agree as you will have posted both purchase invoices and hopefully(!) sales invoices since then.
I'd start by having a look through the liability activity to see if you can see where the £5.08 could have come from - it should contra out each 1/4.

catja

Thanks Jan

I think the accounts are in a mess invoices have been entered as though the company is vat registered and a stand alone cmpany but they were part of a larger group and covered by their VAT number, they have now split and have their own vat number but it looks to me as though the previous accountant who installed SAGE instants did not realise you have to do the whole thing manually so to speak.

On quickbooks it is all done for you and I must admit I assumed the same would be in SAGE, too, I asume in Line 50 you don't have to make all the journals yourself etc, is this the wizard Poodle was talking about.

Thanks again Jan for all your help

Jan

Sage Instant in fairly basic so you don't have the wizards that Line 50 does - but I tend not to use the wizards anyway. I use L50 at work & Instant for my husbands bookkkeeping which confuses me at times!
Can you see if there are any journal transactions for the VAT at all? They used to be only done once a year in my present job 'till I took over, when the external accountant checked the VAT.

You'll find Sage very different from Quickbooks, I used to use both in a previous job.

catja

Definitely different

I assume you would look in the nominal activity report for that code to see if any journals had been made.

I assume if no journals had yet been made the VAT liability account should be zero? So the only time you should have anything showing in the VAT account is after you have journaled in the balance from the other control accounts?

This manufacturing company is forecasting start up sales of over a million pounds and the accountant they hired put in SAGE Instants as the accounts software :thumbdown:

Jan

Yes to both Q's. the liability account isn't a control account - it should clear to nil each 1/4 as shown in my example, although you will have a balance before the bank payment goes through.

You can upgrade to Sage Line 50 if need be. You'll get used to Sage, I'd used Quicken before QB and thought it was great till I was trying to use both(didn't help that I only used QB once a 1/4 to do clients VAT return).

Sounds as if you are having quite an interesting time, good luck :001_smile:

Poodle

Hi

I have a rogue Sage instant Accounts version 11 that has the wizard under

Modules
Wizards
VAT Transfer

I know that other versions do not have the wizard, but all it is is a lazy way to process the journal.

Poodle