VAT Adjustments With Making Tax Digital.
Some businesses make regular VAT adjustments, especially if they are partially exempt or within the capital goods scheme. The question is how these adjustments can be made once Making Tax Digital is in place.
A business that is partially exempt from VAT has invoices falling into three different categories. Those which wholly relate to taxable sales, those that relate to exempt sales and those where VAT can be partly reclaimed. It is this last category that may cause confusion as a business will not know how much VAT can be claimed until adjustments are made at a later stage.
The good news is that these adjustments do NOT need to be made in a digital format. It is totally acceptable to work out the amount of each adjustment on even a handwritten piece of paper.
Once the adjustment figure has been calculated, be it an under payment or an over payment, it can then be entered into the digital accounting system. A final comment would be that while a business does not need to digitally record the working out of the adjustment, the supporting paper calculations must be retained for six years.
For help and advice on this or any other issues, please get in touch with our Lancaster office. A member of our senior team will be happy to arrange an informal meeting to discuss ways in which we can support you and your business.
Author: Alan Taylor FCCA
A former pupil at Ripley St Thomas C of E High School, Lancaster, Alan joined Scott & Wilkinson direct from school in 1994 and qualified as an Accountant in 2001. As practice manager, Alan is responsible for the day-to-day...
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