Blonde Accountant
Blonde Accountant Registered Posts: 86 Regular contributor ⭐ ? ⭐
I have just started working for a company who have had a CVA in place. They are cash accounting. To deal with the creditors, I set up a new bank a/c (this is on sage) and paid all of the creditors that were included on the CVA through that. So the bal of the new bank a/c is the bal of the CVA, if you get what I mean. I did ring the vat office before I did this as this will affect the vat return, the lady that I spoke to told me to look at section 11.3:

Where the relevant date falls…

on or after 1 January 1998
tax must be accounted for on all supplies made and received up to the date of the insolvency

prior to 1 January 1998
no adjustment at the relevant date is required.

This tax should be entered on to the VAT return for the period immediately preceding the relevant date, and is treated as a liability arising before the insolvency.

She seemed to think that I can claim the vat on the return.

I have just ran it and it is a pretty big refund, I just wanted to check to see if anybody else has ever come across this before, please.




  • deanshepherd
    deanshepherd Registered Posts: 1,809
    Doesn't sound right to me.

    You havn't actually paid anyone anything, right? You are just doing this so that the supplier ledgers on Sage now match what is left to pay under the CVA?

    Under normal VAT accounting this would leave a large VAT bill (i.e. paying back input VAT on supplier invoices written off). Under cash accounting there will be zero effect.

    I think you should be able to achieve the correct result using dummy credit notes rather than bank payments.
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