I have discovered an error in my VAT accounting, in the amount of less than £50, that means I have inadvertantly claimed back too much from the Revenue
(I erroneously had thought there was VAT on some recurring invoices in the previous quarter and have now discovered this to be incorrect so need to make the adjustment for current/iminent quarterly return).

How and where do I record the overclaim in Solar?

Hi Sharon,

You should edit the original purchase and change the VAT rate to 0%. This will correct the VAT Liability balance but it will not affect your next VAT return. You therefore need to manually adjust your next VAT return as you copy the figures from Solar Accounts to the HMRC form (ie. increase Box 4 and Box 7 by the appropriate amounts).

Regards,

My concern with that approach is the audit trail: As the amount is only ~£50, I can make the change without needing to inform the Revenue BUT I will no longer have figures in Solar that match what I submitted in the previous quarter.

If I have a VAT inspection, I will only have my notes to confirm the error and importantly, the date of discovery.

What I would prefer (I think) if I can do it, is a manual entry to the VAT Account at the date of discovery for the error amount that adjusts the current VAT accounting to resolve the overclaim.

So far no luck in adding a manual entry that shows the VAT overclaim 'repayment' in the VAT return, AND the same amount to the relevant Expense category AND linked to the entry in the bank account settling the VAT liability.
Any further advice Mark?

Hi Sharon,

There are two separate transactions:

1. The 'manual correction' General Transaction dated in the current VAT period from the VAT Liability account to the appropriate expense account.
   2. The normal payment to HMRC after you submit your VAT return - this is the payment that affects your bank account and settles the VAT liability.

Regards,

Thank you Mark.

I had done that too but didn't achieve the desired result. Am I trying to achieve something that is impossible or just plain wrong: I was expecting to see the VAT overclaim figure appear on the VAT report and contribute to the Solar VAT return report (box 5).

(As VAT Treatment for the 'payment' is out of scope it will not appear in the VAT to be paid, ever, correct?)

Thanks you so much for your help - amazing as always!

Hi Sharon,

Yes both of the transactions (ie. the General Transaction adjusting the VAT Liability and the payment to HMRC) are treated as out of scope by Solar Accounts. Therefore you need to manually adjust the VAT return figures as you copy them from Solar Accounts.

Regards,