Hi
Client of ours had a recent VAT audit. As a result of this, HMRC made corrections to the submitted VAT return and suggested we reflect these in our own accounts on Quickbooks so that they align on any future inspection.
Two returns were affected.
In the first return, no input VAT was claimed in Box 4, although there was a purchase balance in Box 7. The main reason for this was the expenses were deemed unclaimable at that time (long and complicated story).
In the subsequent return, the position had changed and input VAT was claimed related to expenses declared in the first return. As the VAT code had changed, the expenses were treated as an exception within QuickBooks, but as Box 7 had been filled in the prior return it was not populated.
HMRC have corrected the returns such that the first return is a NIL return and the second return aligns Box 4 and Box 7.
We need to somehow unwind and re-instate everything correctly in Quickbooks. I was thinking I would unfile both VAT returns, change the VAT code on all of the expenses associated with the first return to 'No VAT', run that return and mark it as 'filed'. This should generate a NIL return (note nothing would be send to HMRC).
I would then correct all of the expenses and re-run the second period. This would bring forward all of the expenses as exceptions and correctly populate the second return. I would then mark that as filed also.
In theory I think this should align the returns with HMRC. Sound about right?
