After completing the VAT Return, the reconciled values from the Sales Tax Control Account and Purchase Tax Control Account should be transferred to the VAT Liability nominal code to show the value due to be paid to, or reclaimed from HMRC.
On paying or receiving the VAT, a bank payment or receipt can then be posted to clear the VAT Liability nominal code.
These transfer journals may be done manually, however, this article explains how to post the journals automatically
- Complete your VAT return and note the values from box 1 and box 4
- Navigate to the Transaction tab.
- Select the VAT Transfers icon.
- Enter the date of the transfer in the Date to field.
- Enter the amount from the VAT return box 1 in the Sales field.
- Enter the amount from VAT return box 4 and deduct the amount from VAT return box 2.
- Click Save.
An automated journal and ledger entries are created for you.