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lisa180
Level 2

How invoices affect VAT

Hi all, I'm reaching out for some help with how the VAT figure is calculated in QB. I have a number of unpaid invoices which I have written off as bad debt, but the sales figure on the taxes page stays the same. If I add an invoice the figure increases no problem! How do I sort this? I have two invoices to sort for the current VAT quarter but there are also quite a few invoices from last year which I think we have paid VAT on when we shouldn't have.

Thanks in advance.

Solved
Best answer July 20, 2021

Accepted Solutions
GeorgiaC
QuickBooks Team

How invoices affect VAT

Hi lisa180, if your VAT has been set to cash for the duration of your filings on QuickBooks, then creating the credit note with the same VAT code as the invoice and applying this will result in no net impact to the VAT return, as the VAT is only accounted for when the transaction is closed/paid.

 

Please get back to me below if you have any further questions :)

View solution in original post

10 REPLIES 10
EmmaM
QuickBooks Team

How invoices affect VAT

Hello Lisa180, What transaction did you do to write off the bad debt in QuickBooks? This will help us see why the VAT has not been affected. There are options we can go through to adjust the return once we know that. Thanks.

lisa180
Level 2

How invoices affect VAT

Hi EmmaM. For the majority I raised a credit note to clear the balance but there is one which I raised a refund receipt for. Thanks.

Ashleigh1
QuickBooks Team

How invoices affect VAT

Hello Lisa180, thanks for coming back to us here, so when you raised a credit note and refund receipt was VAT applied to any off them? 

lisa180
Level 2

How invoices affect VAT

Hi Ashleigh1, yes VAT was on all of them.

MirriamM
Moderator

How invoices affect VAT

Thanks for keeping us updated, lisa180.

 

Upon creating a Refund Receipt with a VAT code or Credit Memo, they should appear as a negative amount on your VAT return. You can review the VAT 100 return dated on those transactions and check Box 2 for the Sales for the negative figures.

 

To run the report, here's how:

  1. In the left menu, click Reports.
  2. Scroll down to see the Manage VAT section. 
  3. Click VAT 100 Report.
  4. Set the necessary filters.
  5. Click Run report.

From there, check Box 2 for the negative figures.

 

To know more about how VAT works in QuickBooks Online, see the below articles:

Let me know if there's anything else that you need. I'll be right here to assist you. Stay safe!

lisa180
Level 2

How invoices affect VAT

Hi MirriamM, that figure is always zero no matter what date period I run.

Mark_R
QuickBooks Team

How invoices affect VAT

Thank you for following the steps shared by my peer above and sharing the result with us, @lisa180.

 

Allow me to step in and provide additional information on how VAT affects sales transactions.

 

One of the possible reasons why VAT applied to a credit note and refund receipt hasn't been affected is because of the VAT accounting scheme. If your VAT accounting scheme is set up as Cash, you'll need to apply the credit note to the invoice. However, if it's set as Standard, you'll want to post the VAT to the credit note's date. Then, adjust the date of the VAT 100 report as it should show a negative value on the VAT on sales.

 

If you still got the same issue, I recommend reaching out to our QuickBooks Support Team. This way, they can further look into this matter and provide some troubleshooting steps to get this resolved. To reach them, please follow the steps below:

 

  1. Sign in to your QuickBooks Online account.
  2. Click the Help button.
  3. In the QuickBooks Assistance chatbox, select Talk to a human and choose I still need a human.
  4. Hit Contact Us.

 

You can also check out this article for another way of reaching out to our support team and its support hours: QuickBooks Online Support.

 

Once you're ready to submit your VAT return, you can read through this article for more guidance: Submit a VAT return in QuickBooks Online.

 

I'm still open to your replies if you have additional questions about VAT. Have a great day ahead!

lisa180
Level 2

How invoices affect VAT

Thanks Mark_R. The VAT section is set to cash. I'll contact the support team!

lisa180
Level 2

How invoices affect VAT

Further to this, I contacted the support team as suggested. I was on the phone for 1 hr 42 mins and for a lot of that time I was put on hold whilst the QB employee tried to work this out. The problem hasn't been resolved. Can anyone help??

GeorgiaC
QuickBooks Team

How invoices affect VAT

Hi lisa180, if your VAT has been set to cash for the duration of your filings on QuickBooks, then creating the credit note with the same VAT code as the invoice and applying this will result in no net impact to the VAT return, as the VAT is only accounted for when the transaction is closed/paid.

 

Please get back to me below if you have any further questions :)

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