Is there a requirement for VAT to be included in Journal Entries

There probably is a need to be able to include VAT in many Journal Entries, but I just wondered if that was really the case.

I have done Dividends and Corporation Tax neither of which have COA Accounts that default to include VAT Tax naturally.

However, my COA Account Accounting Fees does include VAT as default. What I discovered is that when I was doing Accrual and Reverse Accrual Journal entries to allocate my accounting fees for last year even though the invoice will be paid in this years tax year, when I selected Accounting Fees it keep including the VAT and I had to go back and delete the VAT as I noticed the VAT was zero. However, I might not have noticed that the VAT amount had changed on the summary page.

Not being a big user of Journal Entries I was wondering whether there are many if any occasions when one would wish to include VAT on the journal entry and if not, Journal Entries could be configured to default to no VAT on any account?

There are some use cases where VAT tax code needs to be used on journal entries. If journal entry should have no effect on your VAT figures, then obviously don’t use VAT tax code.

Well if you are planning on introducing a new module that would deal with accountants wanting to do reverse journal entries then this would not be an issue for me in the future as out of all the journal entries, the only one that I had to remove the tax from was the accounting fees COA. I was just wondering whether VAT was used in Journal Entries in case it was an idea to remove the VAT within journals. Ok thats fine.

Accruals are only internal financial transactions, therefore in the Journal for Accounting Fees you would change/select the tax code “UK Exempt”, then there would be no calculation complications.

Changing the tax code for a selected entry doesn’t change the COA tax code for that expense

I may be misunderstanding you, but I think that you are saying that in the entry where it shows the VAT 20%, I can just click that box and select no tax. This is what I have done. My problem is more to do with me remembering to remove the tax for that particular transaction. As the COA defaults to putting in 20% tax, this means that if I do reverse journal accrual or even just a plain journal entry accrual for accruals and accounting, I have to remember to remove the vat. Removing its not the problem, remembering to remove it is!

In that case, add to your cheat sheet, year end Journal accruals = no tax