It is time for my first VAT return. I notice Solar uses date of invoice payment for purchases not the date of the original invoice. I thought the date of the original invoice is the tax point for VAT regardless of when it is paid. For example I have entered invoices but have not paid them yet so they are not included in the VAT return.

Hello Ginny,

Yes under the normal VAT rules you can recover VAT on your purchases even when you have not yet paid your supplier. However, you can choose to use the 'cash method' to account for VAT - in this scheme you only recover VAT when you pay your supplier and only account for VAT on sales when you receive payment. To set this up in Solar Accounts click menu Setup > Contact Details & VAT > VAT Is Calculated...

See this page for more details of the cash method for VAT:
http://www.hmrc.gov.uk/vat/start/schemes/cash.htm

Regards,

Thanks for the prompt reply. Can I change purchase transactions already entered to standard VAT as I must have used cash accounting by a mistake?

Hi Ginny,

This particular VAT setting applies to all transactions, including the ones that were entered before you change the setting.

Regards,