SageForum for UK versions of Sage 50- Help and support.

Our accountant entered a debit adjustment in the VAT liability account at the beginning of the year (2012/13) for VAT to be reclaimed. I've reclaimed what I could (not all of it as we didn't have a VAT invoice/receipt) using the manual adjustment option on the VAT return. The problem is I've now got a credit balance sitting in the manual adjustment account. Do I clear this out by Dr the adjustment account (2204) & Cr the liability account (2202)? If I did this it would just leave the difference (in the liability account) between the accountant's adjustment at the beginning of the year and the amount I was able to claim back, which would be correct...right?! I take it the accountant would then clear this amount out when they do the year end?

Thank you.

The liability account should represent your actual liability to the revenue.

Once you offset the manual adjustment against the liability it will still show an incorrect liability.
You need to journal this back out of liability so that the liability account represents the ACTUAL liability, which hopefully is now zero.
Where you should post this to is the suspense account, it is something that is exceptional and that the accountant will want to review.
write a nice clear description on the journal explaining the situation eg Reclaim diminished no paperwork because in a year you will have no idea why you did it.

Ok so just to be clear...

Dr - Manual adjustment account (amount of the manual adjustment)
Cr - Vat liability account ....

then

Dr - Vat liability account (the remaining amount that couldn't be claimed) leaving a nil balance
Cr - Suspense ....

Sounds about right to me,

Thanks very much.