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VAT Margin Scheme for used goods freeagent entry
We are VAT registered and using the VAT Margin Scheme Universal Accounting for purchases and sales of used goods. This requires us to pay VAT on the difference between the buying price and selling price of the goods.
It took me a while to figure out how to enter this so that the VAT return is correct and there are 2 balancing entries to satisfy the double book accounting system. Here's my solution:
For example your total profit on the used good sales on which you owe vat (gross margin) is £11,750.
1. Create an invoice (to "contact" Inland revenue) for a negative amount ie a credit note with 0% vat (same as the sales that took place) for £11,750.00.
2. Create an invoice to the same inland revenue "contact" for £10,000.00 with normal VAT (currently 15%), this would calculate vat automatically of £1,750.00.
You can check this balances by looking at the "contact" inland revenue, you can also see it on the vat return and you can look it trade debtors to see this balancing and not effecting your accounts.
Hope this helps someone! Maybe me when I forget next quarter ;)
It took me a while to figure out how to enter this so that the VAT return is correct and there are 2 balancing entries to satisfy the double book accounting system. Here's my solution:
For example your total profit on the used good sales on which you owe vat (gross margin) is £11,750.
1. Create an invoice (to "contact" Inland revenue) for a negative amount ie a credit note with 0% vat (same as the sales that took place) for £11,750.00.
2. Create an invoice to the same inland revenue "contact" for £10,000.00 with normal VAT (currently 15%), this would calculate vat automatically of £1,750.00.
You can check this balances by looking at the "contact" inland revenue, you can also see it on the vat return and you can look it trade debtors to see this balancing and not effecting your accounts.
Hope this helps someone! Maybe me when I forget next quarter ;)
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Inappropriate?One further step...if you want to stop these 2 new invoices appearing as "open" or "overdue" you'll need to contra them away. I have a bank account called contra account that I use for this purpose and always keep at 0. In this bank account - contra account click add a transaction choose the correct invoice to receipt, repeat for the other one.
