VAT & Lennartz - Double Entry Help

Brian D

Hello,

Please could somebody help me prepare a journal for the following information below:

Qtr ONE APR - JUNE

Total Input VAT £10,323

Total Output VAT £19,892

NB: We are a charity, therefore we operate a partial exemption scheme ie We can partially claim out total input VAT ie £10,323, therefore the amount we can claim as Input VAT is £7,555.

Total Payable to HMRC is £12,337


Thank you in advance.

Brian

What entries goes to the VAT control account and Profit and Loss account? Also does the VAT control account must be zero at each quarter or certainly by the year-end?

Poodle

Hi Brian,

The journal that you require, dated the 30th June is as follows. I have assumed that you operate 3 separate VAT accounts in your general ledger on the balance sheet as this makes it easier for PE, one for input VAT one for output VAT and one as the VAT liability control. You will also need one account in your SOFA / P&L called 'Irrecoverable VAT' that will be the 'cost' for the VAT that you are unable to recover.

Input VAT £10,323 Credit
Output VAT £19,892 Debit
VAT Liability control £9,569 Credit
Irrecoverable VAT £2,768 Debit
VAT Liability control £2,768 Credit

After you post your journal you will have a credit balance on your VAT Liability control account of £12,337 being the amount owing.You will be using the accruals method for accounting for VAT for PE and so this journal should also take your Input and Output VAT accounts to 'nil' as at the 30th June

This balance will stay on the VAT Liability control account until you make your payment in July and then post a bank payment to the VAT liability control to take that balance to nil.

Brian D

Thank you for your help.