Forum Message

Paying for purchases from previous year

My clients finantial year started on 1st August and I have started entering invoices from that date. My quiry is this; several cheques were issued in early August for invoices relating to purchases in July. I need to allocate these payment to something as the invoices they relate to are last years. As we are for VAT puposes doing cash accounting, these cheques need to be outside the scope of VAT just this once, Advise please.


Posted by Peter Smith on Nov 6, 2009 10:40 AM GMT

Hi Peter,

If you have not entered any purchase invoices from the previous year, set the opening balance of the Accounts Payable to the amount due at the start of the financial year. When you issue a cheque, record a Money Paid Out transaction from the Cheque Account to the Accounts Payable account (the Type field should be 'General Payment').

You can set the VAT Treatment to 'Out of Scope', but are you sure your client cannot recover the VAT?

Cheers,


Posted by Mark McLaren (Solar Accounts) on Nov 6, 2009 11:22 AM GMT

Thanks for your promt reply. My clients previous accountant has already claimed the VAT back on the invoices. We are now changing to cash accounting.


Posted by Peter Smith on Nov 6, 2009 11:49 AM GMT

I see - then yes, the VAT Treatment should be 'Out of Scope'.

Cheers,


Posted by Mark McLaren (Solar Accounts) on Nov 6, 2009 12:05 PM GMT