Support topics - VT Transaction+

Transactions outside the scope of VAT

The old VT Transaction
In the old VT Transaction, you had to indicate if a transaction was outside the scope of VAT when you entered it. The trouble with this method was that it was very easy to forget to do that. Hence large numbers of transactions had to be altered when the VAT return backup report was reviewed. Also, there was no way to enter a transaction that was partially outside the scope of VAT.

VT Transaction+
In VT Transaction+ each analysis account has a VAT scope setting, and the VAT scope of a transaction is based on the accounts it is analysed to. These settings can be changed by choosing the Set Up>Accounts>All command and then by double clicking on an account. Provided you have the November 2007 version or later of VT Transaction+ installed, if you change a setting you will be asked if you want all previous transactions changed.

You can also change a transaction with a zero amount of VAT to outside the scope of VAT by right mouse clicking on it in an unsaved VAT return and choosing the Change Transaction To Outside The Scope Of VAT option from the pop-up menu. Once again, you are asked if you want all other transactions to be changed.

It is also possible to change the VAT scope of an individual transaction by right mouse clicking on it in any report and choosing Edit Transaction from the pop-up menu. In the Edit Transaction dialog the VAT scope tick box for each analysis entry must be changed.

Common mistakes
A common mistake is to assume that a transaction is outside the scope of VAT when it is not. The list of transactions that are outside the scope of VAT per HMRC is quite small. In particular, all supplies that are zero rated, exempt or from unregistered suppliers should be included in your return.

Another common mistake is to miscode drawings to an expense account. The transaction is thus included in the VAT return. If the Move Entry feature is then used to correct the misposting, VT Transaction+ gives you no option to alter the VAT status (to be fixed in subsequent versions). A similar problem can arise with sales and purchase ledger payments are initially analysed to income or expense accounts by mistake.