Solar Accounts

Hello,

I have been going through my accounts and I have come accross an anomoly.

How do I record the Vat that I reclaim using VAT mileage reclaim.

I have issued a purchase invoice for the VAT amount. Then I have paid that Invoice. But it then records the amount twice.

I think the prob is the purchase Invoice then the Payment of the invoice.


What is the best way to record this transaction.


Cheers
Matt

Hi Matt,

In general it's OK for a purchase amount to be recorded twice - once as a purchase invoice and again as a purchase invoice payment.  (Only one of those transactions will affect your VAT return).

Regarding the mileage transaction, please tell me: Are you self-employed or is your business a limited company?  Also, is the business VAT-registered?

Thanks

Hi Mark,

I'm self employed and Vat registered, (still using same vehicle as before vat registered)

I have a purchase order for £1500
an Invoice paid for £1500
And another purchase order for £600

And at the bottom (credits debits) it says £3600 in each. Giving me the impression that £3600 has been recorded somewhere when it should only be £2100

Am I just reading too much into it/Not understanding how it works

Thanks
Matt

Hi Matt,

Yes I can see how the 'total debits and credits' figure is confusing, but the figure of £3,600 is correct.  It is really just the total of all transactions - for example, if you borrowed £10,000 from the bank and then repaid it, the total debits and credits would be £20,000.

By the way, you don't need to create a purchase invoice when recording the mileage expense.  Instead, you can record a Money Paid Out transaction with the Type set to 'General Payment'.  Here is an example:
http://www.solaraccounts.co.uk/help/how-to-record-mileage-allowance-payments.php
This page talks about mileage allowance payments to company employees, but the transaction would be similar in your case - just set the Paid From Account to 'Owners Drawings and Personal Use'. 

Also, note that VAT does not apply to the full mileage payment amount in the case of company employees.  I suspect this is the same in your case, but I'm not sure - I recommend you check this with HMRC and your accountant.

Regards,

Thanks Mark,

I'm using the Mileage allowance scheme. Its just how to record the VAT reclaim portion using HMRC approved rates.



Thanks
Matt