Below is an example of a vehicle purchase deposit transaction, where you would need to recover 100% of the VAT paid of £1750 through your VAT return:
- Total cost of goods: £10,500
- Payment deposit debited from bank account: £1,750
- VAT to be collected from HMRC: £1,750
Create an expense to record this transaction, using a split. Split the transaction by adding 20% VAT to the first split as this is the cost of the product & VAT, then add a negative split of –8750 (£1750 / 20%) to cancel out the sales portion. This will display the desired result.
How to create an expense manually to record the split:
- Go to 'Expenses' from the main menu
- Select 'New Expense'
- Click ‘Create manually’
- Key in the information required
- Attach documentary evidence
- Press ‘Done’, and this new expense will be added to your list of expenses on the ‘Expenses’ page
Please check the screenshot below to see the relevant calculations:
Once you have created your expense, you can manually attach/match it to the corresponding bank transaction.
Go to 'VAT report' preview screen to check the VAT to be collected appears as expected in the VAT report: