If you retain documentary evidence within Business Finance Assistant (e.g. invoices and expenses), it is critical that you ensure your bank transactions are correctly matched to these documents to avoid duplicate VAT entries in your VAT return.
Why do duplicate VAT entries occur:
Duplicate entries for the same transaction can only occur in accrual accounting.
Cash accounting uses the dates of transactions to create VAT entries. Transactions must be confirmed with Business Finance Assistant before an entry appears on your VAT return.
However, accrual accounting uses the dates of your invoices and expenses to create VAT entries rather than the dates of transactions.
By confirming a transaction without attaching the correct invoice or expense, two VAT entries can be created for the same transaction: one for the unmatched invoice or expense and one for the confirmed transaction.
To check that documentary evidence has been attached correctly:
- To review/confirm a transaction and ensure that the correct invoice or expense information is attached:
- Go to ‘Bank Transactions’ in the main menu
- Select the correct bank account
- Locate the transaction
- Check that the VAT, category, customer or supplier field have been populated correctly and amend if required
- Or select ‘Split/Attach’ > 'Attach/Match document' to manually match an invoice or expense.
- Click ‘Confirm Selection’ and then ‘Done.’
- Press the 'Confirm' button
In accrual accounting, if you select ‘Attach/Match’ the list of available matches can contain Business Finance Assistant generated receipts as well as invoices or expenses that you’ve created.
The example image below shows a sales receipt generated by Business Finance Assistant (indicated by the yellow box below) and invoices (indicated by the green box) as available matches. If you have created an invoice or expense using Business Finance Assistant, you must select this as documentary evidence rather than the generated receipt to avoid duplicate VAT entries in your VAT return.
- An invoice or expense not matched to a bank transaction will be shown as ‘Unpaid’. In accrual accounting, if an invoice or expense has an incorrect ‘Unpaid’ status it can become a duplicate VAT entry on your VAT return.
If an associated transaction has appeared in your bank account, you should check that the status of the invoice or expense has changed from ‘Unpaid’ to ‘Paid’:
Invoices with an ‘Unpaid’ status appear in 3 separate places within Business Finance Assistant:
- The ‘Incomings’ widget on the dashboard
- The ‘Outstanding’ section of the ‘Incomings’ page
- The ‘Unpaid’ tab of the ‘Invoices’ page
Expenses with an ‘Unpaid’ status appear in 3 separate places within Business Finance Assistant:
- The ‘Outgoings’ widget on the dashboard
- The ‘Outstanding’ section of the ‘Outgoings’ page
- The ‘Unpaid’ tab of the ‘Expenses’ page
If a transaction has been matched to an invoice or expense incorrectly or an incorrect ‘Unpaid’ status is appearing:
- Find the incoming transaction from your Bank Transactions page
- Press 'Edit' on the transaction line
- Select the check box alongside the transaction(s) that you would like to edit
- Press 'Actions'
- Select 'Clear 1 selected transaction' to remove any categorisation or attachments
- To attach/match the correct invoice or expense, press 'Split/Attach' then 'Match/Attach document'
- Select the correct document from the list
- Confirm selection > Done
- Press 'Confirm'
The transaction should now appear correctly on the VAT return according to the payment date. Check to ensure that your invoice or expense now has a ‘Paid’ status.