This scenario can only occur if the following apply:
- You have set your finance settings and VAT basis to ‘Accrual’ accounting
- You use Business Finance Assistant to create your invoices and expenses
If you use Business Finance Assistant to create your invoices and expenses, your transactions should automatically be matched to these. All you need to do is to review the information and press 'Confirm' if the transaction is not already shaded in green:
- Go to your ‘Bank Transactions’ screen
- Select the correct bank account
- Click on the transaction to expand the view
- Check that the correct invoice or expense has been attached
- Click 'Done' to close the expanded view
- Click 'Confirm'
Once your transactions have been 'confirmed' and are all shaded in green, the transactions will appear in your VAT return and your invoices and expenses will show as ‘Paid’.
When bank transactions are not correctly matched to invoices and expenses this can cause duplicate entries on your VAT return.
Accrual accounting uses the dates on your invoices and expenses to generate VAT entries in your VAT return. By marking a transaction as ‘Confirmed’ without matching the correct invoice or expense, two VAT entries can be created for the same transaction.
Sales invoices
Business Finance Assistant does not automatically match bank transactions to invoices if:
- The invoice amount does not match the associated transaction
- The invoice was created in Business Finance Assistant after the transaction appeared in your bank account, for instance, in the case of an advanced payment by a customer
Instead, Business Finance Assistant will automatically create a sales receipt as a record of sale and categorise the transaction as ‘Other Income’.
This sales receipt is presented as an option to manually match to the bank transaction (indicated by the yellow box in the below image), even when an invoice is subsequently created or uploaded.
In accrual accounting, the transaction will appear on your VAT return separately from the invoice if you:
- Select the sales receipt and match it to the transaction rather than the invoice
- Set a VAT rate for the transaction and mark it as ‘Reviewed’
You must ensure your bank transactions are correctly matched to invoices to avoid duplicate VAT entries.
Expenses
Business Finance Assistant does not automatically match bank transactions to expenses e.g. supplier invoices if:
- An expense amount and/or date range does not match the associated transaction
- The expense was created in Business Finance Assistant after the transaction appeared in your bank account, for instance, if you paid a supplier invoice early.
Instead, Business Finance Assistant might automatically create an expense as a record of payment, match it to the transaction and categorise the transaction. This Business Finance Assistant generated expense is automatically matched to the bank transaction even when you subsequently create or uploaded an expense.
In accrual accounting, the transaction will appear on your VAT return separately from the expense if:
- The Business Finance Assistant generated expense remains attached to the transaction
- You set a VAT rate for the transaction and confirmed it
It is critical that you ensure your bank transactions are correctly matched to expenses to avoid duplicate VAT entries.
See FAQ How do I correctly match documentary evidence to my bank transactions?