payment on account vat and sage line50

[Deleted member 78333]

Using Sage Line 50 for accounts for caterer/restaurant. Owner often pays lump sums on account to supplier, and receives lump sums from customer. VAT on Purchases calculated as per invoices. VAT on Sales receipts from restaurant shown ok. Recently set up Customer records to keep record of event deposits as advance payments. Again client receives lump sums not always same on invoice so receipt shown as Payment on Account (Bank - Customer etc). Now discovered they've not been included in VAT return because Payments on Account show T9 by default. How do I correct a) those that have gone through already and b) ensure the POA is shown on the VAT return in future.
Here's hoping, thanks
KBaccounts:|

 

[johndon68]

Are they on Standard or VAT Cash Accounting?

John

 

[johndon68]

Just to add to the above, I'm assuming from the details in the original post that Standard VAT is being used in which case, the POA should be going through with T9 as they have no effect on the VAT Return which is only affected by the Invoices that the POA will, ultimately, be allocated to.

John

 

[David Griffiths]

Just to add to the above, I'm assuming from the details in the original post that Standard VAT is being used in which case, the POA should be going through with T9 as they have no effect on the VAT Return which is only affected by the Invoices that the POA will, ultimately, be allocated to.

John

But if you put them through as T9, will Sage let you set them against T1 or T0 invoices? My impression is that it won't, unless something has changed.

 

[johndon68]

That only applies on VAT Cash Accounting.

John

 

[Deleted member 78333]

Hi and thanks for your feedback so far. I am using standard and not cash accounting.Where I think I've gone wrong is that I've not so far allocated the payments on account to any invoice thinking that was the end of the matter. It clearly is not and the mechanics of Sage are different to what I expected.
Correct me if I'm wrong . The Payment on Account only gets treated as T1 , and therefore only appears on the VAT return when it gets allocated to an invoice. True or false? Then in future if I treat each receipt from customers as allocated against invoice it will be reflected. Again true or false? Many thanks for youyr help on this one .
KB

 

[johndon68]

Correct me if I'm wrong . The Payment on Account only gets treated as T1 , and therefore only appears on the VAT return when it gets allocated to an invoice. True or false? Then in future if I treat each receipt from customers as allocated against invoice it will be reflected. Again true or false? Many thanks for youyr help on this one .
KB

No, on Standard Accounting, a Payment on Account will always be T9 as you pay VAT on the invoice, not on the Payment on Account. A sales invoice will affect the VAT Return, a Payment on Account does not affect it at all, nor should it.

John

 

[Deleted member 78333]

Thanks again but was in danger of not seeing the wood for the trees.
Have thought through the process and realised that when the customer record was set up the previous guy had shown the opening balance to include opening transactions rather than with no opening balance and then raise fresh invoices. Opening balance doesn't show on the VAT return understandably. Have tried this on demo data and it works - makes sense now.
Will now have to post a journal item to offset against the opening balances otherwise when the invoice is raised it'll be duplicated.Thanks for all your help.
Cheers
KB

 

[Deleted member 78333]

Payment on account not showing because it's standard accounting VAT and that's based on Sales Invoices. The customer record with an opening balance shown as invoice. , defaulted to T9 and therefore not showing on the VAT return. Corrected via the customer record and reversing the opening balance with invoice bu showing a credit of the same amount. Then putting through the same sales invoice as T1 VAT. Logically thatr then is reflected in the Activity screen of the Customer Record and eventually on the VAT record.
It works.

 

[ACA Newbie]

Hi,

I have an urgent doubt with regard to the VAT treatment of a payment on account in Sage with CASH accounting. Does Sage assign it with T9 by default or does it do something else?

 

[ACA Newbie]

What VAT code does Sage assign to payments on account for cash accounting?

 

[johndon68]

If you are on Cash Accounting, Sage will use the same tax code as that on the invoice when posting a payment on account.

John

 

[David Griffiths]

If it relates to a payment made before an invoice is issued, then Sage will ask you for the tax code at the time that you post the payment on account. You will then only be able to set that payment against a later invoice with the same tax code.

 

[johndon68]

Apologies, I was thinking of a sales receipt on cash accounting.

John

 

[David Griffiths]

Apologies, I was thinking of a sales receipt on cash accounting.

John

I knew that your answer would be correct, of course, but thought that the question related to money first, invoice second!

 

[ACA Newbie]

I see. Thank you.

 

[tara roche schiavon]

Hi, we are on Cash Accounting, we have received payments on account from a client - however he wants us to hold that for a long time,
1. Do we post the payment on account as T9?
2. If in the future a client wants this payment allocated to an invoice - can we allocate a T9 payment to a T1 invoice? if not what do we need to do?
3. If we need to write it off (and sometimes we do as the client disappears) - do we create a write off invoice as a T9 code - so they match?
4. do we have to pay vat on a payment on account? as there has been no transferring of services from our end?
Thanks
Tara

 

[johndon68]

1. No, the payment on account needs to have the correct T1 tax code.
2. If this did happen, you edit one of the transactions so both codes match, allocate them and then edit the transaction back again.
3. No, you need to use the relevant tax code.
4. You pay VAT and receipts and, in the case of a payment on account, you have received money regardless of whether the service has been provided.

John