When a report is created for VAT it includes invoices on the basis that they were issued within the period for which the VAT report is generated. The problem is that some of the invoices will not have been paid yet so I have not actually collected the VAT. It would make more sense to me if the report only included invoices marked as paid? Is this a bug?
You could do a VAT report on a “cash basis”. In South Africa I have one company which is allowed to submit VAT returns on a cash basis, but all others are accrual, so invoices are included as soon as they are raised.
P.S. Just to clarify, the companies don’t have a choice how they submit their VAT returns (accrual or cash basis), it’s dictated to them, so you need to see what category you fall into. It can be an issue when clients don’t pay timeously.
No. Many tax authorities would consider failure of your customers to pay your problem, not the government’s. You have made a sale, so you owe the tax. @pau is correct that you need to understand the law in your jurisdiction. And the solution given is correct, despite being unusable in many places.
1 Like