Hi again,
Sorry to bombard you with questions, I am just trying to get this right, So far I have input all of my Sales and Purchases but not quite married up my bank accounts but before I spend hours inputing all that I have a question. I become VAT registared on the 1st of Nov to which I have not yet put any thing in since. I am a bit concerned that my VAT liability from my purchases is -£3000 ish. (that is minus) This is not right and I assume that some where along the way I have made a mistake. What is the cause and how do I rectify this?
Thanks Again.
Laura
Hi Laura,
When you sell something which includes VAT, your VAT Liability increases, and when you buy something which includes VAT, your VAT Liability decreases. If you have more purchases than sales, it's possible that your VAT liability is negative, meaning that HMRC owe you money.
I recommend you go to the Account Activity screen and set the account to 'VAT Liability', then check that all the appropriate sales (as well as purchases) are affecting the balance of this account. If there are sales transactions missing, check that the VAT rate is 15% for those transactions.
Cheers,
