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Post Info TOPIC: Fixed Assets with VAT on Balance Sheet


Senior Member

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Fixed Assets with VAT on Balance Sheet


Hi

I am hoping someone can help

I have a client who I recently VAT registered

Prior to this I have done the accounts with the fixed assets entered as gross as there was no VAT involved.

In order to reclaim VAT on the first VAT return I have gone back to these fixed assets and I have amended them in my computerised system to allow for the VAT

This now of course sends my balance sheet wrong as the cost b/fwd figures are now net of VAT when they were previously gross.

I'm probably going mad but I can't seem to think how to make an†adjustment for†this.† Should I alter the fixed assets back to gross and just make a journal for the VAT?

Please help

Thankyou in advance



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Guru

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Hi Valerie

Your balance sheet should be correct, the fixed asset should be showing as net of VAT but you should now also have the input VAT as a creditor meaning the same total shows as net assets



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Doug

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Guru

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Sorry meant to add, have you previously claimed CA on the fixed assets?

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Doug

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Guru

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Date:

Sorry meant to add, have you previously claimed CA on the fixed assets?

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Doug

These are only my opinions of how I see things and therefore should not be taken as advice



Master Book-keeper

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Morning you two.

Valerie - dont amend the previous posting (which is how Ive read your post) so then your brought forward/prior year balances will be as per the accounts. Just do the journals as Doug suggests, dated on the first date of the VAT reg period (cr asset, dr VAT), but care how you do it (software dependent eg just journalling to some without the correct VAT codes on the VAT control will just mean the VAT sits in the account and is never pulled forward for the VAT return).

CA - good Q Doug. Yep an adjustment is required.

Care on the VAT rules for reclaiming pre-reg VAT. 4yrs/6mths/goods or assets still in use, some reduction for consumption. HMRCs own advice was conflicting last time I saw it, plus only case law relating to services with the asset/goods side yet to be tested, with greater care required for any personal use)

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Joanne††

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Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.



Senior Member

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Many thanks for the replies No capital allowances have been claimed so one less thing to worry about. Yes, Doug that makes sense. It does ( almost ) balance with the Vat in creditors. A small difference that must be something else so I‚ll need to investigate that. I guess that‚s sufficient it was perhaps my need to see the assets carrying over the same.

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Forum Moderator & Expert

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Why were no capital allowances claimed?



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Shaun

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Senior Member

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It‚s a relatively new business with little profit so it wasn‚t beneficial to claim any capital allowances and they‚ve been carried forward.

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Master Book-keeper

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Cheshire wrote:


Care on the VAT rules for reclaiming pre-reg VAT. 4yrs/6mths/goods or assets still in use, some reduction for consumption. HMRCs own advice was conflicting last time I saw it, plus only case law relating to services with the asset/goods side yet to be tested, with greater care required for any personal use)


†Hi joanne

HMRC have backed down on the consumption policy now and you can claim the full amount of VAT charged at the time the assets/goods were purchased, subject to the proviso's you've pointed out.

https://www.gov.uk/government/publications/revenue-and-customs-brief-16-2016-treatment-of-vat-incurred-on-assets-that-are-used-by-the-business-prior-to-vat-registration/revenue-and-customs-brief-16-2016-treatment-of-vat-incurred-on-assets-that-are-used-by-the-business-prior-to-vat-registration

EDIT:† Took out a final sentence regarding the link, turns out it is clickable



-- Edited by Leger on Thursday 28th of June 2018 02:06:30 AM

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John†

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Master Book-keeper

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Thanks John. Of course they have! Plus of course Im way behind with my reading. Got about 150 items squirreled away to read, with the plan to read them when I went down to Bath a few weeks ago, but unfortunately the whole bloody family followed me down there as a mini surprise. Oh heck - just seen that its 2016 as well, so I have more reading material than I realised. Thanks for the update. Cant you tell Ive done none since then!


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Joanne††

Winner - Bookkeeper of the Year 2015, 2016 and 2017

Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.



Master Book-keeper

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I'm sure there's oodles of stuf that I've missed as well, it's just this one I was keeping an eye on as I disagreed with HMRC. I did a pre reg in 2014 and it was just after that that the HMRC "guidelines" changed. It's good to see they saw sense in the end



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John†

†Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.

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