How journal entries affect the VAT Return
This explains how to include journals on the VAT return
What you need to know
However, you can include VAT on your journals and report them on the VAT return, if required.
Include a journal on a VAT return
When entering the journal, choose to the check box under in the Include VAT Return column.
The VAT rate used for each line of the journal are determined by VAT rate set of the ledger account selected on each line.
How the journal affects the VAT return
|Ledger Account||Default Nominal Code||Credit or Debit||Affects the VAT Return|
|VAT on sales||2200||Credit||Increases Box 1|
|VAT on sales||2200||Debit||Decreases Box 1|
|VAT on purchases||2201||Credit||Decreases Box 4|
|VAT on purchases||2201||Debit||Increases Box 4|
|Any income account||4000 to 4940||Credit||Increases Box 6|
|Any income account||4000 to 4940||Debit||Decreases Box 6|
|Any expenditure account||5000 to 9999||Credit||Decreases Box 7|
|Any expenditure account||5000 to 9999||Debit||Increases Box 7|
|* Any other account||Credit||
|* Any other account||Debit||
* The last two don’t include journals to the following nominal codes:
- VAT on sales
- VAT on purchases
- VAT on Sales Holding
- VAT on Purchases Holding
- VAT liability
Flat Rate VAT Scheme
If you use the Flat Rate VAT Scheme you can’t journal a value to directly affect Box 1. To record a sale on your VAT Return,
- Enter journal to an income ledger account. This will affect Box 6 as above.
- The VAT is calculated using your flat rate percentage and included in Box 1.
If you still need to amend the value in Box 1, you can manually adjust your VAT Return.