How will QB include the vat on sales and purchases for my 2 months of entries prior to using their program? VAT return due April.

Id like to do the same but with 4 years of backdated equipment purchases. 

I only registered for VAT this May. 

If I import all these purchases as expenses now and put the date as whenever they were in the last 4 years: 

1. Will QB automatically adjust my VAT for my first return? 

2. Will it throw my accounts out of whack and make my profits look terrible after taking into account the last 4 years of purchases? 
3. Is there a way to batch upload these as I have them in a spreadsheet now and there are several transactions. 

Hello FelixM,

Any backdating of VAT from before you were registered will have to be included by either manually adjusting the figures for your return, or dating the transactions within your VAT period (making note of the correct date within the description). If you are only accounting for the last 4 years of purchases, your accounts for those years will of course not show correctly - this will be something you should check with an accountant. You can import bills in batch, however these will come across as open, and you will need to mark them individually as paid. You can do this by going to the cog wheel > import data > bills.

Please let us know if you have any further questions.

Thanks,

Talia

Thanks so much Talia,

Maybe its worth mentioning a few key dates so you can help me figure this one out:

1. I've only had QB since April 

2. I've only been VAT registered since May

3. My first quarterly return is due August 7th. 

Can you tell me the best way to enter these old purchases from 2015 - March 2019 into QB so that my first VAT return is correct (bearing in mind they are from before the days I was even using QB or was VAT registered). There are 40-50 in my spreadsheet so I'd rather be able to bulk upload them. 

What do you advise?

Hello FelixM,

Thank you for posting here in the Community. I'm here to lend a hand with your concern about the old purchases in QuickBooks Online.

When entering past transactions, you may need to record them in the same order they were created or received. That said, it would be best to add them individually into the QuickBooks system.

For additional insight into entering historical information, such as the prior transactions, I'm attaching an article that I recommend: How to enter historical information.

In case you need an additional reference in the future about submitting VAT return, check out this article: 

• Submit a VAT return to HMRC using MTD in QuickBooks Online
• File your VAT return and record tax payments in QuickBooks Online

I also suggest seeking expert advice from an accountant to ensure your books will be accurate.

Please be sure to let me know if there's anything else that you need help with, and the Community will be more than happy to help you accomplish it.

Okay thank you for those links but I have a few more questions:

When entering past transactions, you may need to record them in the same order they were created or received. That said, it would be best to add them individually into the QuickBooks system.

Should I add them as expenses? Or bills? Or what? 

Should I add them into the main business account or another account like a cash account so as not to disrupt my main accounts figures? 
Will these transactions be taken into account in my Taxes page on my first VAT return (as this will essentially show that I am owed money from paying VAT in the last 4 years)

Thanks

Hi FelixM,

You can record the transactions based on the actual scenario. Example: If you bought a memory card, you can record it as an expense.

With regards to the posting accounts of those transactions, I'd suggest referring to an accountant.

On the other hand, QuickBooks will not reflect the VAT of your pre-registered expenditures on your August return since they happened before May. By default, only the transactions within the tax period (May-June-July) will be reflected on the August return. However, adjust the return to reclaim your taxes from your pre-registration expenditures.

I would highly suggest referring this to accountant to make sure that your taxes will not be overstated.

If you have other questions, feel free to post back.

Thank you JessT

My accountant has said it is fine to adjust because I have all my receipts and spreadsheets of past purchases in order.

My problem now is that if I enter all of these past 4 years of expenses into QB, it skews my books and shows my losses as huge. I dont want this and don't want my dashboard to show a figure that is incorrect so please can you tell me how I can do this in a way that it wont affect my profit and loss account?

Hello Felix M

Thanks for reaching out.So if you are adjusting box 4 for example you would need to set up a VAT adjustment chart of account(usually a liability) to use for the adjustment account.This will not show therefore on your profit and loss but will show on your balance sheet.

Expenses and income require expense and income accounts attached when you enter them as they are historical transactions they would not affect the current financial year reports as long as  you dated them with historical dates.

Your accountant would be the best place to ask this as we can not really offer advise on this as these transactions were expenses that did happen on those dates.If you want a record in the QB you would have to record them.

If not you can just do the adjustment and as long as you have a record elsewhere of the transactions so  if HMRC were to ask that will be enough.

If you are concerned about this it might be worth checking with HMRC

Thanks

Emma

Thank you Emma - this is some of the clearest advice I've received.

What do I choose from the drop down menus on the adjustment sections? 

My accountant said to speak to you about this... 

Hi FelixM,

In addition to Emma's advice, the VAT rate is determined by where the transaction happened. If it's within the UK, you can use the 20% VAT and the VAT liability account.

As always, you should consider using professional advice for specific help on your individual circumstances.

I'm also linking an article for more information about common VAT codes.

Let me know if you have further questions. I'll do everything I can to answer them.

I know I am replying to an old thread but in case anyone reads this and thinks everything can be backdated for the 4 year period - it cannot.

The 4 year rule applies to goods you still have at point of registration (you may need evidence if questioned).

Anyone who plans to do this should either record invoices at their tax point and then do a journal or adjust the return to account for these (dated within the VAT quarter) this way it will be included in the VAT return.  Alternatively, date them on the first date of the quarter (for identification) include the actual invoice date in description or memo (which I personally prefer) and post them to 'other creditors'.

Once you have the finalised year of accounts and the opening balances for the next year, a journal can be done to adjust any discrepancies on the accounts side.  From that point forth everything should fall into place.

I am not an accountant or claim to be (just work for one).  If you have an Accountant it would be worth getting their advice if you find yourself in this situation.