Hi Team,
hope are all well. i need some guide to adjust my vat amount from previous year 1-1-2021 to 1-1-2022. before this i am not registered vat with compliance authority after 1-12022 i registered with tax authority. now its shown in summery total tax and i need to zero or write off previous amount before registration to null the vat amount. kindly guide what entry i will make to adjust vat become zero in above said period. i am attaching screen shot for reference.
If you were not registered in 2021 then you should not have recorded any VAT amounts in 2021
Your opening balance of 5612 seems to indicate that you did.
Can you confirm this
Hi Joe,
i already recorded some sales and purchase invoices register with wait now i want to make 1 adjustment to write off opining balance instead of delete each invoice vat that already send to customer and supplier.
If you are not registered for VAT, I wonder is it legal to send invoices to customers with VAT ?
I would check with your accountant
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@Furqan_Azam, it seems to me, based on what you have said, that your problem comes from earlier, improper and possibly illegal invoices. You cannot undo that with a journal entry. You need to correct the invoices.
Joe91,
we apply for the vat tax no but some financial requirement its take time but mean while we purchase services from supplier they charges us vat because the are vat registered and that amount i need to be adjusted.
Now in Feb 2022 registered with vat and submit the vat from Feb 2022 quarterly but it show all the tax liability in summery and need to adjust liability before this period
You need to remove the VAT from all Sale and Purchase invoices issued dated prior to your Vat registration becoming valid
If the Supplier charged you VAT it is not recoverable and should just be added to your costs
Similarly, any invoices you sent to customers should not have any VAT
I strongly suggest you talk to your accountant about this as you may end up in a lot of trouble if you have issued illegal invoices
if you see the summery screen the liability shows 5855 this amount is most of purchases from suppliers the deducted the vat amount now i need to adjust this liability before submit the actual vat registration date February 2022 to onwards quarterly.
Post the edit screen of one of the purchases invoices and I will say what you need to do
The Actual Amount to be payable of vat is 239 but in summery tab shows -4389 how to adjust. check with image
You need to change the line on the invoice to
You need to do the same to all Purchase Invoices prior to your VAT registration date
You need to correct your Sales Invoices too - although this is more complicated because you have presumably sent them to your customers.
If your customers have paid you, then any VAT on the invoice does not belong to you.
In fact, you probably should not have put any VAT on the invoice at all - although this will depend on the laws applicable in your country
Thanks a lot Joe i resolved according to your suggestion. i remove all vat amount from purchase and sales now summery shows exact amount to pay liability as on Feb 2022 to onwards.
Thanks a lot for your support you guys always supportive and by the way i am accountant (Finance)
Glad to be of help
You should be aware that the records of the Sales Invoices in your system may not be the same as the Sales Invoices your customers have - if ever any of your customers have a tax audit, you will not be able to validate the invoices they hold.
You really need to get advice from your accountant on this.
The purchase invoices who received from your suppliers do not pose a problem other than the fact that you will not be able to recover the VAT charged and this will reduce your profits accordingly