Hi there,
We use the Vat Margin Scheme for second hand goods for some sales. To account for this, we keep a spreadsheet of such sales (originally recorded as zero rated) that tracks the additional VAT due based on the individual purchase and sale values, and this creates a liability that we then need to post to the VAT Control account.
The sales are recorded initially as zero rated, but when the specific VAT liability of that sale is calculated, we need to account for the fact that the net value of the sale has reduced, with the remainder being an additional VAT liability.
An example based upon an item puchased at £100 and sold at £150 would be:-
- Sale recorded as £150 net value
- Actual VAT Liability on second-hand scheme is £8.34 (so box 1 needs to increase by this amount)
- Actual net sale amount is £141.66 (so box 6 needs to decrease by £8.34)
I normally itemise each sale in the spreadsheet, which calculates the VAT liability, and the totals I journal into Quickbooks Desktop at the end of the VAT quarter.
Prior to moving to Quickbooks online, we accounted for this by making adjustments to two boxes in the VAT100 in Quickbooks Desktop using a simple journal entry as follows:-
Cr Hm Revenue & Customs against VAT Item 1 (increasing the VAT due on sales)
Dr HM Revenue & Customs against VAT Item 6 (decreasing the Net Sales)
This worked perfectly, and ensured that the VAT return was correct, and accurately accounted for the extra VAT liability due on those second-hand sales. All the boxes displayed what they should do.
However, with Quickbooks Online, it won't allow me to make such journal entries against the VAT boxes.
Furthermore, in trying to enter it, and then correct it, it has become a holy mess.
In this quarter, the liability in question for all the second-hand scheme sales was £494.
So basically I needed to increase the value of box 1 (Vat due on sales) by +£494, and the value of box 6 (net value of sales) by -£494 to correctly account the Margin Scheme Sales originally posted as zero rated.
There is an option in the 'Prepare VAT' section that allows us to adjust each box, but when adjusting Box 1, it insists I select another account to post against. I instinctively selected 'VAT Control', but whilst this seemed to adjust the liability for the VAT return itself when prepared, it didn't seem to be reflected in the VAT Control account.
The big problem, is that QB Online will not allow me to edit, or even remove any adjustments (even before marking the return as filed) so the more I tried to correct, the more everything went wrong, and the longer the trail of 'attempts' becomes. And I cannot return to an earlier position by restoring a backup, so I am in a bit of a mess, and keep digging deeper.
I have marked the return as filed, as the numbers were correct on the return and the VAT Suspense Account, allowing me to get on with filing. However, the opening balance of the VAT Control Account for the new VAT quarter was -£494 (when it should in fact be zero). So, rather than accounting for the fact I owe £494, it has instead just allowed me to pay it but then claims it back, and defers the problem.
I then tried to adjust the VAT Control back to zero by again adjusting Box 1 on the current open VAT return (Apr-Jun), but instead of selecting 'VAT Control' as the adjustment account, I selected 'Sale of Product Income', in the hope it would then tackle box 6. I also selected the first date of the VAT quarter as the adjustment date. But all to no avail.
The 'Prepare VAT Return' numbers are again correct (by virtue of the £494 showing as an exception), but the VAT Control account is still wrong. So when we come to file this current quarter ion 3 months, it will be £494 down, plus any other VAT Margin scheme sales.
Basically, the hand-holding system of QBOL has created a bit of a mess that it won't let me get out of. I'm not asking for help on how to prepare or account for my VAT. It is more with how to get that simple edit into the software accurately (and get the old edits out).
I really need to know how to:-
--- simply create an equal and opposite journal entry that increases the value of box 1, and equally decreases box 6 (like we could in QB desktop).
---how to cancel/adjust any edits that have been made in the adjustment section of the 'Prepare VAT Return' prior to it being filed.
Can anyone help?
