I'd like to set the opening balance of the VAT liability to £1333.68. Which is what is owed to HMRC from previous year. However, when I try to set this figure the balancing account obviously shows the same figure. Which account should I put this into? HMRC are technically a creditor, so should I open a 'creditor's account under Equity and put them as a minus figure in there? I'm a bit lost and not sure where to put the liability in Solar Accounts.

Thanks very much.

I've since tried going through the Retained Earnings route. Ie. by raising a purchase invoice for HMRC for the figure owed. There was also a debtor from the previous year too for £365.58. So now with this two figures now paid there is a negative figure of £968.10 in retained earnings. Will this not only cause confusion with the accountants when I submit the year end for my client???

Argh... Lol. :o)

Hi Gail,

For money owed to HMRC it's best to directly edit the opening balance of the VAT liability account (ie. double-click on this row in the Account list). The Balancing Account is automatically adjusted so that total assets equals total liabilities plus total equity. To get the Balancing Account to zero, set the opening balance of one of the other equity accounts (such as Retained Earnings).

If you owed money to a supplier at the start of your financial year, create a Purchase Invoice dated in the previous year with the Account set to 'Retained Earnings'.

Regards,

Thanks ever so much Mark.
Kind regards,
Gail