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J
JD01234
September 10, 2020
Solved

Flat Rate Vat adjustment

  • September 10, 2020
  • 1 reply
  • 0 views

Good morning,

I have made a Flat Rate Vat adjustment on my return.

The return was filed with the correct amount and paid, so far so good.

I have just looked on the vat control (Liability) account and it is showing as an increase instead of a decrease of the adjusted amount.

Why has this happened, have I missed something?

Best answer by payment after leaving

Good morning,

Thank you for your informative response :smileyvery-happy:

After reading through your advice I noticed that I did indeed post to an income account, but...

To ensure the amount was deducted from the vat return I placed a minus in front of the amount to adjust the vat to be paid.  

Am I correct in thinking that this has therefore increased my income account rather than decrease it?

 

My accountant was incapacitated so I had to do the return thinking it would be easy enough :smileyfrustrated:


Hi JD01234 If you have placed a minus in front of the figure within the adjustment it will reduce the amount in box 1 and box 6. For the adjustment account you need to use a liability chart of account, the best option is to create one especially for Vat adjustments.

1 reply

G
GeorgiaC
September 10, 2020

Hi JD01234, 

 

Thanks for your post - can I check which box on the return you made the adjustment against? 🧐

 

J
JD01234Author
September 10, 2020

Box 1 

Jen_D
Jen_D
September 10, 2020

Welcome back to our forum, @JD01234,

 

The posting of the adjustment in the Liability Account, depends on the Adjustment Account selected for that entry. If the purpose of the adjustment is to decrease the payable, like if you received a credit and you owe less VAT, use an income account for it.

 

This is an example an adjustment created with an income account:

 

An increase in the liability results from using an Expense Account for the adjustment. To correct this, go back to the adjustment and verify the account used and recreate it when necessary. Follow these steps when recreating the adjustment:

 

  1. Go to the Taxes menu, and then open the VAT page.
  2. Select the  Prepare return for the period you are submitting for.
  3. Click the Adjust link in the VAT line that you want to change.
  4. Choose an Adjustment Date and VAT rate.
  5. For the Adjustment Account ▼, choose an income account to reduce VAT owed.
  6. Enter the Amount of the adjustment.
  7. (Optional) Add a memo if needed.
  8. Press Save when done.

You can also refer to the steps in this article for reference: Adjust your VAT liability

 

Let me know the result after checking on this. I'll be right here if you need further assistance with the adjustment or anything QuickBooks related. Have a nice day!

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