Accounting for underdeclared VAT

bigmuggsy

Hi

Client has a b/fwd VAT creditor of £7000 in the accounts, during the year a VAT assessment calculates underdeclared VAT of £10000, at the end of the year this is still outstanding.

Having credited the VAT liability what would be the best account to debit?

Thanks

mike1983

Under-declared sales???

Well under-declared VAT may mean under-declared sales or over-declared expenditure.

Therefore, if there is an under-declaration of sales then you would simply debit sales as I assume that the sales under-declared would have been credited to sales at gross.

The same goes for over-declared expenditure.

Kind regards

Mike

MJH Accountancy Services Ltd

bigmuggsy

Appreciate your reply, many thanks.

JodieR

I think that you can either do it as mike says, or just create an expense account called 'underdeclared VAT'. The latter is simpler if the adjustments relate to a number of different accounts.