If I record a payment made to Customs & Excise for a VAT bill, how do I record it in Solar accounts? It's not a direct expense on the business so it can't be claimed as a running cost can it?

Hi Nick,

You should record a Money Paid Out transaction from the Cheque Account to the VAT Liability account with a VAT Treatment of 'Out of Scope'. If you use use Solar Accounts to compute your VAT return (click menu Tools > Prepare VAT Return) it gives you the option of automatically recording the VAT return payment.

This payment is not an expense - it's more like paying off a loan. Therefore it will not reduce your taxable income.

Regards,

Excellent, many thanks for that information.

hi i have made my first VATpayment how do i record it correctly on solar. i have read your forum and done what it says but the vat liability account still remains high can you help

thanks

Hi Nick,

Go to the Account Activity list and set the Account name at the top to 'VAT Liability'. Check that your VAT payment to HMRC appears in this list, and that all the transactions affect the running balance correctly (if not, double-click on the transaction to edit it). Keep in mind that the VAT Liability is always affected by invoices (not invoice payments) so it may not match the amount paid to HMRC.

Regards,