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JulieTilke
Level 1

Making a VAT adjustment is messing up my QB bank balance

When I prepared the last VAT for return for another QB user, we had to make an adjustment to a previous period for VAT charged in error. This reduced the VAT liability as expected (increased the size of the refund the guy was due), and then he filed the return. So far so good, but.... we failed to notice at the time that QB also posted a credit for the adjusted amount to the QB bank account. Not sure why it did this to be honest........

The refund was duly paid for the whole amount on the VAT return, so we recorded the refund as paid and then processed the incoming bank transaction matching the transactions per the regular instruction.

we now still have the pesky extra credit for the adjustment on my QB bank account which is effectively double counting the credit, and means the QB balance is still out of sync with the true balance. What are supposed to do to correct this?

 

 

 

5 REPLIES 5
JonpriL
Moderator

Making a VAT adjustment is messing up my QB bank balance

Hello @JulieTilke,

 

Since the credit has been processed and the bank transaction has already been settled, we can consider deleting the duplicate credit. But I'd still recommend consulting your accountant for additional assistance and professional advice.

 

For additional information, here's a helpful article you can read for ideas about how you can review transactions in your account register: Find, review, and edit transactions in account registers.

 

Keep me updated in the comments if you have any other questions. I'll be here to lend a hand.

JulieTilke
Level 1

Making a VAT adjustment is messing up my QB bank balance

Thanks for coming back to me on this.

I have to admit that I'm struggling with this one. Tracking down the transactions isn't a particular issue - i guess I'm just puzzled (and somewhat frustrated) by the way in which QB recorded the adjustment. The fact that it records the adjustment with the contra entry in the bank account seems very odd as clearly when HMRC make the refund payment (which i believe i recorded correctly), for the full amount. This matches off with the downloaded transaction from the bank feed.

What should I have done? Enter the payment as the amount without the adjustment? Would that have then allowed me to split the incoming bank transaction and match it against the VAT payment figure and the QB adjustment item? I could undo the current transaction match, but I assume trying to re-record the VAT payment to a lower number would just generate an additional record and make the situation worse................

If i just delete the superfluous QB bank account transaction, will that just impact the bank account account, or will it also update the VAT account? I assume that might cause me additional problems.....

 

Ughhhh...... the reason we have the adjustment in the first place is that in the prior quarter we were on the flat rate scheme and QB mirrored a VAT exempt expense we put in via a journal entry (because we were paid an invoice net of cc fees), with a matching sale. QB then ignored that fact that the sales transaction was exempt when it calculated the VAT due and we were overcharged. Our bad that we failed to spot this when we submitted that return Smiley Sad Fortunately, we're now on standard VAT accounting and the autogenerated sales transactions don't have an impact as the VAT calculation takes account of both sides and cancels out the additional charge.

 

This isn't an accountancy issue. Right now, i just want to remove the superfluous bank account transaction without messing with the VAT account. I'm happy to just delete that transaction if you can confirm to me that nothing else will be impacted.

 

Thanks

 

 

 

 

 

 

 

 

Mark_R
QuickBooks Team

Making a VAT adjustment is messing up my QB bank balance

I appreciate you getting back to us and sharing detailed information about your concern, @JulieTilke.

 

Let me provide additional information about matching the VAT adjustment and deleting the bank transactions.

 

Since you have two transactions against one payment for the taxes, you don't have to match these transactions. Instead, you can record it from the Banking page and post the initial payment to the VAT suspense account. Then, post the adjustment to other income account coming from HMRC.

 

Also, deleting the bank transactions won't affect the VAT account since they're already added in the For Review tab.

 

I'm adding this article to learn more about adjusting your current VAT account: Adjust your VAT liability.

 

Please post a reply below if you have additional questions with your VAT return and bank transactions. I'll be more than happy to assist you again. Have a great day and take care always.

sramadhar
Level 1

Making a VAT adjustment is messing up my QB bank balance

I made a VAT adjustment in the previous period. For the current period , the adjustment amount is duplicated - under tax collected on sales and under tax due from previous periods. Why did Quickbooks account for this adjustment twice and how can I fix this?

 

JenoP
QuickBooks Team

Making a VAT adjustment is messing up my QB bank balance

QuickBooks automatically adds a journal entry to show the adjustment, sramadhar.

 

You will see it in the the next VAT return you that you'll file. You will see the adjustment amount on your return against the box you have adjusted. The adjustment is shown as a journal entry under the related section of the VAT Detail report.

 

This is to make sure that the amounts you'll be filing is correct. It's also the reason why you see another entry in the period after the one that you made adjustments. More details about this are discussed here: Make VAT Adjustments in QuickBooks Online.

 

Allow me to add one more article for more references when preparing your VAT return: VAT Exceptions and Reports in QuickBooks Online.

 

Add another reply to this thread if you have follow-up questions. We'll make sure that they're sorted out.

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