Hire Purchase in Sage Query

lisaloo

I am working on the vat for a farmer who has purchased a new mower in the last quarter. The cost of the mower is £8750 + vat of £1750 coming to a total of £10500. He paid 3 amounts toward the mower at the start of January - cash deposit of £1071, a trade in of £4080 - an admin fee of £50 ( not included in the HP amount) and the first of 3 annual payment of £1783, leaving an outstanding balance to be paid of £3566. The HP balance is £5349 ( £1783 x 3 payments) Can anyone tell me how to post in sage? Usually the deposit covers the vat but in this instance the deposit is less than the vat. Normally I would set up a journal for the £8750 on a T1 to Additions and T9 the £ 8750 to the HP and deduce the HP by the payments from the bank. All help appreciated - thanks!

coojee

If he's got a VAT invoice then you just enter it as normal, DR Asset with the net, DR Input VAT with the VAT and CR HP Account with the total. It doesn't matter that the VAT hasn't been paid provided he's not cash accounting for VAT.

KernowAccountant

coojee wrote: »

If he's got a VAT invoice then you just enter it as normal, DR Asset with the net, DR Input VAT with the VAT and CR HP Account with the total. It doesn't matter that the VAT hasn't been paid provided he's not cash accounting for VAT.

I disagree with your statement in respect of cash accounting for VAT - VATR 1995, s.58(2).

coojee

KernowAccountant wrote: »

I disagree with your statement in respect of cash accounting for VAT - VATR 1995, s.58(2).

Is this a reverse charge then? It's been a while since I did a VAT return for real so it's quite possible that something has changed that I'm not aware of. Can you explain to me why it doesn't apply here please? I guess you could argue that the HP side is a separate issue and that the invoice has been paid in full it's just that there is now a separate loan situation in place which has no VAT implications.

KernowAccountant

coojee wrote: »

Is this a reverse charge then? It's been a while since I did a VAT return for real so it's quite possible that something has changed that I'm not aware of. Can you explain to me why it doesn't apply here please? I guess you could argue that the HP side is a separate issue and that the invoice has been paid in full it's just that there is now a separate loan situation in place which has no VAT implications.

Excuse my ignorance - of what relevance are the reverse charge provisions? They relate to supplies to other EC member states. s.58(2) of The Value Added Tax Regulations 1995 provides that: "The scheme [cash accounting] shall not apply to lease purchase agreements, hire purchase agreements, conditional sale agreements, credit sale agreements or supplies where a VAT invoice is issued and full payment of the amount shown on the invoice is not due for a period in excess of 12 months from the date of the issue of the invoice." It's not new.

coojee

KernowAccountant wrote: »

Excuse my ignorance - of what relevance are the reverse charge provisions? They relate to supplies to other EC member states. s.58(2) of The Value Added Tax Regulations 1995 provides that: "The scheme [cash accounting] shall not apply to lease purchase agreements, hire purchase agreements, conditional sale agreements, credit sale agreements or supplies where a VAT invoice is issued and full payment of the amount shown on the invoice is not due for a period in excess of 12 months from the date of the issue of the invoice." It's not new.

Because, following your quote, I was looking at this:
"Regulation 58(2)(g) provides that the cash accounting scheme shall not apply to supplies of goods which are subject to a reverse charge. That sub-paragraph is amended so that the scheme also excludes supplies of services which are subject to a reverse charge."

I couldn't find any other reference to VAT 1995 only VAT 1994. So it's as I said then that the fact that it's HP is separate to the VAT invoice.

bumblebee

You should have had a solution to your question by now, but thought i should reply anyway.

This is what I think:

1. Claim input VAT per VAT invoice i.e £1750 (whether cash accounting or not)

2. Record: Using Sage If you posted via Supplier Ledger: Dr Asset Cr Supplier account.

Hope this helps