input/output VAT

hannahh

which is vat on sales and which is vat on purchases?

i can never seem to remember it as they could both be seen as input and output vat seeing as you either get the money in then have to pay it back out or the other way round

and how can i remember which is which?

cheers

Marg22

output and input vat

Hi Hannah

I think about the invoices you send out and the one which you receive.

Sales invoices you send out of your company to other companies, so they are output tax.

Purchase invoices are received into your company, so they are input tax.

Hope this helps.

Regards

Marg

agatha

OUTPUT VAT- VAT on goods or services sold.

DR Cash (or Debtors)
CR Sales
CR VAT Account

INPUT VAT- VAT on goods or services purchased

DR Purchases
DR VAT Account
CR Trade Creditors

SSAP 5: Sales and purchases shown in the P&L EXLUDE VAT
Each quarter the balance on VAT ACCOUNT (output VAT less input VAT) is calculated.

hangawi74

Hi
Is it wrong to say the vat input is a debtor? Because we collecting this money from hmrc?

Zowie

The best way I remembered which way round they are is

SOPI

Sales = Output Tax and Purchases = Input Tax

reader

Input VAT is a debtor, i.e. recoverable from HMRC (normally by offsetting it against Output VAT which would be a creditor)

hangawi74

Is it that the Vat amount to be claimed by hmrc should be entered as a vat input as creditor as at that moment it’s to be paid then after claiming it will be entered as an adjustment on debtors side to reduce vat input creditors that’s my understanding!

reader

Output VAT is charged on sales and is a creditor.
Input VAT is suffered on purchases and is a debtor.
At the end of the VAT quarter (or VAT month or VAT year) journal adjustments can be done to offset/reduce the output VAT creditor using the input VAT debtor.