Hi. I am a new business start-up. I am registered for VAT. I have yet to bill anyone, but am completing my VAT return for the 3 month period ending June 09. I have entered all of my expenses and clicked on the button to 'Prepare a VAT return'.

My query is this: I haven't billed/invoiced any customer yet, but for some reason, in Table Item #1 (VAT due in this period on sales and other outputs), a figure of GBP3.00 is showing.

I don't understand why the system us showing this amount, as I have yet to invoice anyone.

Thoughts and suggestions really welcome, and thanks in advance.

Hi John,

Go to the Reports list and select the 'VAT Return Detail' report - it will show you which transaction is causing the VAT amount of £3

Cheers,

Hi Mark.

Thanks for the very quick reply. Yes, had a look where you said. It identified three entries. They are in 'VAT on Sales'. What I don't get is that the three items are goods/services which I bought, not sold .i.e. they are an expense.

One is EU-related (Skype), whilst the other two are Canadian (MyFax (Protus)).

As I said, I don't know why they are where they are...

Any further thoughts?

Thanks again for your feedback.

John

I've placed them as being 'Out of scope' for VAT purposes. That has done the trick.

Thanks again.

John

Hi John,

Solar Accounts is applying what's called a 'reverse charge' procedure - for VAT purposes you are considered to have both sold and purchased the service. The VAT amount therefore ends up in both Box 1 and Box 4. These amounts cancel each other out so the net result is that you don't pay any VAT on these transactions.

For more information on the reverse charge procedure, see section 16 of VAT Notice 741:
http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageVAT_ShowContent&propertyType=document&id=HMCE_CL_000346
(you may also find the tables in section 21.3 and 21.4 useful)

Cheers,

Ah. Let me have a read... looks like I will have to undo my changes (easily done).

John