Vat on computers

[Kath1123]

Hello,

Could someone help me how to account for vat when you buy 5x computers on finance from dell finance services?
On their invoice I have 3 line which are:
-first instalment amount £862 (12 payments in total quarterly)
-documentation fee £125+vat
- vat £2068.80 (total amount for 5 computers £10,344)

How to account for this vat? the next instalment will be in 3 month but I think if I account for whole vat now then the next instalment would be without any vat.

Thank you.

Kath

 

[faradaykeynes]

You need to book computers invoice as assets net of vat, the whole vat amount would sit in vat purchase control a/c and credit to supplier a/c.
Vat element filtering into vat returns depends what sort of vat scheme are you on, if accrual the whole vat amount would be accounted for in your upcoming vat return, on cash basis it will be based on payments you make, Flat rate would be similar story
Any book keeping package should handle this for you

 

[Kath1123]

Thank You for your replay.

This is the first time I'm dealing with finance payments and vat. We are using Microsoft Navision system and I was trying to post entries:
DR computer acc £862 (with no vat)
DR computer acc (documentation fee £125+vat)
CR the bank £3055.80
but how to account for the whole vat if the system is letting only to post if the difference is up to £50.00?

Thank you.

Kath

 

[AccountantinP]

I am not familiar with the system you are using, but these would be the general principles.

On an accruals basis
you should start by accounting for the total purchase, your invoice total is £12,562.80. (if my assumptions are correct)

Entered by:
DR £10344 in your fixed asset nominal
DR £2093.80 in your VAT control account
DR £125 in sundry account (or wherever you would normally put a document fee.
The CR side of £12562.80 goes to your Creditors Account.

Every payment you make will decrease your creditors control account by £1034.40 and so will your document fee (when you make that payment) of £150. (1034.40*12+150 = £12562.80)

On a cash basis
DR £10344 in your fixed asset nominal
CR £10344 to your Creditors Account.

Every payment you make will credit the bank by £1034.40
DR your Creditors account by £862
DR your VAT account by £172.40.

when you pay the document fee by £125 to your P&L Account and £25 to your VAT Account crediting the £150 to your bank.

As faraday says, you need to first look at what vat scheme you are on. The accruals basis you account for your VAT straight away, the cash you account for it as your pay it off.