What to do about a VAT Adjustment creating incorrect balances in Balance Sheet?

Sal6 · ‎February 07, 2019

VAT Adjustment Error -
Earlier in the year I corrected the expense accounts on a handful of transactions, but the VAT had already been filed for this period, so (despite no change in the VAT rate), these transactions then appeared on the Exception Report on the next VAT return. In the Exception Report I made a VAT Adjustment to get the balance back to the correct amount and filed VAT.

I thought that had solved the problem, but now my end of year numbers aren't making sense on the Balance Sheet and the Total Current Liabilities doesn't add up as the VAT Adjustment is now included as a negative amount in Tax Account (Sales Tax).

Does anyone know what I can do to fix this? What would happen if I now delete that Journal Entry?

Gordon · ‎February 07, 2019

The vat exception report was showing the changes QB made due to the entries made there was no need to do anything it was already done.

You need to reverse those corrections or contact customer service to reverse the filed vat for the periods including those filed with the error, then refile to QB and reconnect the payments.

The issue of not being able to reverse Vat filed is a big issue with Online.

View solution in original post

Gordon · ‎February 07, 2019

The vat exception report was showing the changes QB made due to the entries made there was no need to do anything it was already done.

You need to reverse those corrections or contact customer service to reverse the filed vat for the periods including those filed with the error, then refile to QB and reconnect the payments.

The issue of not being able to reverse Vat filed is a big issue with Online.

Sal6 · ‎February 07, 2019

So what would happen if I simply delete the VAT adjustment? It's still listed in Tax Account (Sales Tax) Transaction Report.

Sal6 · ‎February 07, 2019

I'm really confused by this - I made the adjustment in the first place to ensure I filed the right amount of VAT, so in theory it should have balanced everything out accordingly, but now I can't make sense of the Current Liabilities numbers in the Balance Sheet at all.

Gordon · ‎February 07, 2019

You did not need to make the adjustment QB did it for you and showed you the changes. You have to reverse the changes you put through.

Sal6 · ‎February 07, 2019

Ok, so I've just reversed the changes (deleted the VAT adjustment), which has corrected the error with my balance sheet, but now my VAT balance is showing that I'm owed the amount of the adjustment, which I shouldn't be, and has created an exception report for the current period. Surely this means I'm going to have the same problem at the end of this quarter in that my VAT filing won't balance because of this amount??

Gordon · ‎February 07, 2019

There will be an exception as it re corrects itself but what are you looking at as to the Balance sheet. Vat liability is reported there as Vat control.
When you made the expenses changes what made you think you had to make a vat adjustment, this usually used for HMRC refunds or fines or where you need to correct minor errors of rounding.

Sal6 · ‎February 07, 2019

The Balance Sheet for both years is now correct in terms of this error, it's just the homepage of the VAT centre says 'balance due for period *amount of correction*, rather than 0. The VAT 100 for the current period looks correct as well, but the same value is in the exception report. When I file my VAT for this period, does this mean the amount will still be correct, or will it be reduced by the exception report amount?

Gordon · ‎February 07, 2019

The vat 100 will include the values of the exception report, the report is there for detail of correction for out of period filing like late invoices. or in your case expenses. Remember also that the vat screen is running total of all transactions and will be different to the vat 100 which is date restricted. You might have to take into account as to method of reporting accrual or cash which we have not discussed .

Sal6 · ‎February 07, 2019

Ok, well that seems to make sense, but this situation has boggled my brain for some time - I guess I'll see what happens when I file my VAT at the end of this quarter and hope for the best! Thanks for your help and patience.

Rasheed23 · ‎October 11, 2019

Hello

Could someone help how to adjust exception report on VAT,

I have filed VAT up-to August 2019, client has not used QB for previous year (2018) any software to file VAT, I have started to enter all invoices/payments and recorded VAT refunds on QB, now i have found out all 2018 have transferred to sept returns

How do i adjust this and what nominal account and what date I need to adjust.

What is the impact on previous years accounts

Many thanks

RR

John C · ‎October 11, 2019

Hi Rasheed23

As you have filed a period within QuickBooks and began entering transactions prior to that period they will show as exceptions in the present period. You could edit the transactions so they have a No VAT code and they will not show as exceptions, this should have no consequence as we presume the transaction have already been accounted for in another software, or you can create adjustments. If you are amending box1 we recommend that you create an income account to adjust the amount to, when adjusting box 4 we recommend that you create an expense account to adjust the amount to. We are not trained accountants so we must make you aware that a professional may adjust the amounts to other accounts.

Rasheed23 · ‎October 11, 2019

I have to file previous years accounts using QB TB, if i adjust those figures it will have impact on PNL

How can I avoid this.

John C · ‎October 11, 2019

Hi Rashee23

We recommend that you enter all the historical data, then contact us on 0808 168 8175 we can raise the issue to our Tier 2 department and they will be able to remove the exceptions.

Rasheed23 · ‎October 11, 2019

please find attached VAT returns

I have to adjust all Exception entries which are related year 2018

Rasheed23 · ‎October 11, 2019

I have entered all previous entries

John C · ‎October 11, 2019

Hi Rasheed23

As previously stated if you would like the exceptions removed please contact the telephone support line, 0808 168 8175.

JD01234 · ‎July 21, 2020

Hello Sal6

I wondered if you managed to sort out your problem - I have the exact problem - corrected everything and the balance sheet is correct, but the VAT centre shows the correction as still owing for current period.

Ashleigh1 · ‎July 21, 2020

Hello JD01234,

Welcome to the Community page,

Could you send us screenshots of these so we can look into this more for you.

VAT3 · ‎January 23, 2023

Can I ask how you deleted the VAT adjustments, please? I've been trying to get hold of Quickbooks but the help chat people just end the chat! Not sure if they're having tech issues. Thanks

Ashleigh1 · ‎January 23, 2023

Hello VAT3, thanks for posting on this thread, if you have a look at this help article it tells you the step on what you need to do in order to delete a vat adjustment.

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What to do about a VAT Adjustment creating incorrect balances in Balance Sheet?