VAT Return Adjustment

'How to' steps in this topic are for when the MTD VAT Centre is not used.

If Making Tax Digital for VAT has been switched on you must use the MTD VAT Centre instead of this form.

This form is accessed from the System Manager - VAT Processing menu.

The VAT Return Adjustment form is used to make VAT Return adjustments without updating the Sales, Purchase or Nominal Ledgers. The adjustment will create a new VAT Return transaction, and can also be seen on the VAT Reports.

You can search for previously posted VAT adjustments using the Find form on the Action menu to base a new adjustment on the old adjustment. The old VAT adjustment will not be changed.

The Result tab of the Find form displays the adjustments posted, and the Memo tab displays the comment entered for the adjustment.

- If the Continuous Posting box on your User Profile form is selected, after you have posted an adjustment you are asked if you want to post another adjustment.
- If the Confirm box on your User Preferences form is selected, after you have posted an adjustment you are asked to confirm the adjustment details.

Box	Description
Tax point	The tax point date of the VAT adjustment. A tax point date is used to determine the VAT period to which the transaction belongs. The default is the current system date.
Transaction date	The transaction date. The default is the system date. This can be different to the tax point date.
Ledger	S/L = Sales Ledger P/L = Purchase Ledger N/L = Nominal Ledger
Account	The account for the selected ledger. Optional.
Reference	A reference for the transaction. Mandatory.
Country type Trans. type VAT code	The elements of the VAT code for the transaction. Please see the VAT Codes Help topic for details. The country type is relevant only if the EC VAT application is used.
Goods VAT	The goods and VAT adjustment values (+ or -). You must enter at least a goods or a VAT value. If you enter both values they must both be either negative or positive.
Comment	A mandatory comment that is saved with the VAT Return Adjustment. This will be useful to auditors to explain why the adjustment was required.

The boxes on the VAT Return that will be updated by the adjustment are shown at the bottom of the form.

Accounting for Bad Debt Relief

Bad debt relief allows businesses that have made supplies and paid VAT to HMRC to claim a VAT refund if they have not received payment from their customer.

To claim the refund you must already have accounted for the VAT in your accounts and paid HMRC. You must also have written off the debt in your accounts. You claim the refund by updating Box 4 of the VAT Return.

The debt must have been unpaid for six months after the later of:

the time payment was due and payable
the date of the supply.

Bad debt relief also applies to businesses that have claimed VAT but need to repay it because they have not paid for the supplies of goods or services they have received.

Please visit the 'VAT on bad debts' page on the HMRC website for details.

Postponed VAT Accounting

When VAT adjustments are required to be made as a result of Postponed VAT Accounting (PVA) legislation, they must be processed through the VAT Return Adjustments form using VAT codes with the Postponed VAT Accounting checkbox ticked.

What is Postponed VAT Accounting?