Catering for a VAT payment plan for several delayed VAT payments

Hello PickleRick, 

Welcome to the Community page, 

 If you have already made the payments then you can just use the record payment option in the taxes section and enter the dates you made the payments on. The VAT due is already in the VAT suspense account for you. 

Hi Ashley,

Thanks for your suggestion but I'm not sure I've explained the situation well enough. The payment plan doesn't simply allow me to delay the payments (which as you suggest would allow me to simply record the payments as normal). In this case, the outstanding amounts have been summed together and then divided by a number of instalments, which results in a uniform amount to be repaid at an agreed interval.

I hope that explains the situation a bit better, and as to why my attempt to Record payment to a non-cash account might make sense.

Thanks again

I’m here to impart some information so you can track these payments in QuickBooks properly, @PickleRick.

When recording VAT payments in QuickBooks, you can manually enter the amount that matches the actual payments. This keeps your records accurate and intact.

Concerning the account, I recommend contacting your accountant for the best option. They can provide information and tips to reflect these amounts correctly in QuickBooks.

If you don’t have one yet, you can visit our ProAdvisor website to find an expert. They guide you further from technical and accounting perspectives. Simply enter your city or ZIP code.

Here’s a reference that contains steps to make a VAT adjustment and key things to remember before you submit a VAT return: Make VAT adjustments in QuickBooks Online.

Don’t hold back to drop a comment below if you have any other questions or concerns besides managing VAT payments. We'll always be here to help. Take care!

Hi

Your idea of a suspense account makes sense - but that is exactly what the VAT Suspense account is.

Day-to-day, QBO records VAT in the VAT Control account. When you File a Return, it sweeps the balance into (or out of) the VAT Suspense account. When you Record VAT Payment, the cash is swept from the Bank Account into the VAT Suspense account.

(Hope that makes sense)

From the VAT Record Payment screen simply enter the individual (post-dated) payments according to your schedule (it isn't necessary to pay all at once - you can specify the payment amount/date).

After entering each payment, go back to Record Payment against the same return & enter the next instalment.

I did exactly this during the CoViD VAT relief period.

Hope this helps.

Thank you so much Paul - I'm glad to hear I'm on the right track. I do understand the difference between the VAT Control & Suspense accounts.

But I must be missing something. The payment plan I've arranged consists of 3 instalments, but this is to cover 5 missed quarters. The Record Payment option requires I specify a specific quarter, so I can't record enough payments to close all of these missed quarters. I hope I have explained my predicament well enough?

Sorry @PickleRick - I did mean to add that you may need to split the payments as far as entering into QBO is concerned.

I think the Record VAT Payment will allow you to overpay (& will credit the VAT Suspense account so everything will balance) but you're right - each payment is recorded against one VAT Return so QBO may think one or more returns are unpaid.

Say you have 5 quarters at £600 each, but payable as 3 instalments of £1000, you will have to record this as: 

   Payment 1(a) = £600 against Quarter 1

   Payment 1(b) = £400 against Quarter 2

   Payment 2(a) = £200 against Quarter 2

   Payment 2(b) = £600 against Quarter 3

   Payment 2(c) = £200 against Quarter 4

   Payment 3(a) = £400 against Quarter 4

   Payment 3(b) = £600 against Quarter 5

A bit ugly perhaps when it comes to reconciling the bank account but the split payments will all be on the same date so it shouldn't be difficult.

(certainly less messy than setting up a dummy suspense account I think)

Thanks again Paul.

I can see what you're trying to do, but I can't achieve the same result in my instance. I think this is because there are refunds in a couple of the quarters. I can continue trying to juggle things around but it really feels like I'm forcing QBO to do something it doesn't want to do... I think my only route might be to create a cash suspense account which also feels wrong. If you have any other suggestions that's appreciate but thanks in any case for your efforts.

OK I've managed to make this work Paul - which is brilliant - but I have one last concern!

Having now successfully apportioned each quarter (refunds & payments) to each instalment, I now would expect to be able to reconcile each payment plan instalment from the Banking view.

However, I don't seem to be able to "find" these payments in order to reconcile. It seems the Find match search function doesn't include those VAT payments I've created via the Taxes page. Can you suggest what I should do? Should I record those instalment payments as a transfer to the VAT Suspense account, or create a journal entry to do the same (which I could then subsequently reconcile easily)?

Many thanks again - you've been a great help to me this sunny Saturday afternoon!

As a last effort to close this request for help, would anyone please confirm whether Record Payments results in the creation of a transaction that can be reconciled via the Banking screen, or is it solely to update the state of payments received regarding a particular quarter? If the latter, then why is there any reference to the account to which the payment was made?

I'm trying to understand why the Find match search function doesn't include those VAT payments...

Hi PickleRick, thanks for joining the Community - the Record Payment on the VAT screen posts a transaction that can be reconciled in the payment bank account that it is posted against. If the payment has already been reconciled, then you won't be able to locate a match for this on the 'for review screen' (only unreconciled transactions will show here). To match, the payment account, date, and amount should be the same. 

Hi Paul - a quick one to say thanks for your response. I had mistakenly specified the incorrect bank account when Recording Payment/Refund within the VAT section. Deleting and re-creating the transactions sorted that out (would be nice if they could simply be edited!).

Also - I noticed that VAT refunds don't show up in the Find Transaction page. So it was necessary to "Resolve" by creating transaction to HMRC/VAT Suspense account.