How journal entries affect the VAT Return

This explains how to include journals on the VAT return

What you need to know

You use journal entries when you want to move values from one to another. By default, journals do not appear on the VAT return.

However, you can include VAT on your journals and report them on the VAT return, if required.

Include a journal on a VAT return

When you enter the journal, choose the check box in the Include VAT Return column.

Each line of the journal uses the VAT Rate set on the selected . Each has its own VAT Rate.

Read more about setting VAT Rates on ledger accounts

How the journal affects the VAT return

The following table explains which box on the VAT return updates after entering a journal. This is determines by a combination of the and whether the journal line is a debit or credit.

Ledger Account Default Nominal Code Credit or Debit Affects the VAT Return
VAT on sales 2200 Credit Increases Box 1
VAT on sales 2200 Debit Decreases Box 1
VAT on purchases 2201 Credit Decreases Box 4
VAT on purchases 2201 Debit Increases Box 4
Any other Credit

No effect

* Any other Debit

No effect