Entering Opening Outstanding VAT

Modified on Mon, 11 May at 10:09 AM

This process applies when you are transitioning to a new financial year and have an outstanding VAT balance that has not yet been settled. Enter either a VAT Debtor (where HMRC owes you a repayment) or a VAT Creditor (where you owe HMRC a payment).

You will need the figure from Box 5 of your last VAT return in the old financial year before you begin.

Quick Reference: Debtor vs Creditor

Use the table below to identify which route applies to your situation:

	VAT Repayment (Debtor)	VAT Payment (Creditor)
Nominal Group	Current Assets	Current Liabilities
Nominal Name	Opening VAT Debtor	Opening VAT Creditor
Default VAT Code	O — Out of Scope	O — Out of Scope
Opening Balance	Enter in Debit column	Enter in Credit column
To clear balance	Bank Receipt	Bank Payment

Create a New Nominal Code

Go to Ledgers > Nominal
Search for Current Assets (Debtor) or Current Liabilities (Creditor).
Find the next available code number in the sequence > Add
Name the nominal Opening VAT Debtor or Opening VAT Creditor as appropriate.
Set the Default VAT Coding to O (Out of Scope).
Click Save

Add to Opening Balances

Go to Settings > Opening Balances
Add your new nominal code by typing the name, code number, or using the magnifying glass icon to search.
Enter the Box 5 figure from your last VAT return: into the Debit column for a repayment, or the Credit column for a payment.

Clear the Balance

When the repayment arrives in your bank account, enter a Bank Receipt posted to the Opening VAT Debtor nominal.
When you make a payment to HMRC, enter a Bank Payment posted to the Opening VAT Creditor nominal.
This will clear the outstanding balance from your balance sheet.

Ongoing VAT Returns

From this point forward, process your VAT returns through KEYinfinity in the usual way.
The system will automatically generate a Sales Invoice or Purchase Invoice based on your VAT position.
Use the Quick Pay function (top right of the VAT Returns screen) to receipt or pay directly.