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Process GL Tax Journals for VAT Reporting

Caroline Buckland Updated by Caroline Buckland

Process GL Tax Journals for VAT Reporting

Overview

GL Tax Processing allows VAT transactions entered directly through the General Ledger to be included in VAT reporting and submitted as part of the 9 Box VAT Return.

The functionality enables GL journals to hold additional VAT reporting information, including:

  • Input or Output VAT indicator
  • Net value
  • Tax value
  • Tax rate
  • Tax reference information

These transactions can then be extracted through the GL Tax Analysis process and included alongside Accounts Receivable and Accounts Payable VAT transactions.

Prerequisites

Before processing GL tax journals, ensure:

  • VAT Registration Locations have been configured.
  • Tax Codes have been created.
  • Tax Accounts have been mapped to the appropriate VAT Return Boxes.
  • Users have access to GL Journal Entry and VAT reporting processes.

Configure Tax Account Mappings

Tax Codes must be mapped to the VAT Return boxes that should be updated when transactions are reported.

Tax Accounts by Tax Code

Navigate to:

Main Menu > Systems Admin > System Wide Controls > Tax Controls > Tax Codes 

From the Selection Screen, select General Ledger from the System drop down and select Input Tax from the Input/Output drop down.

Select Search.

For each Tax Code:

  1. Highlight the Tax Code.
  2. Select More > Accounts > Maintain 
  3. Define the GL Tax Account Codes
  4. Specify which VAT Return Boxes should be updated.
  5. Define whether the posting represents:
    • Input Tax
    • Output Tax
  6. Select the appropriate GL Posting Indicator as required by your organisation's VAT reporting configuration.
  7. Save the record.

These mappings determine how values appear on the VAT Return.

 Repeat steps for all Tax Codes until all codes have been setup correctly. 

Enter a GL Tax Journal

Navigate to:

Main Menu > General Ledger > GL Processes > GL Data Entry > Journal Entry 

Create the journal as normal.

For VAT reportable transactions:

  1. Within Lines navigate to Tax Analysis 
  2. Enter a Y in GL Tax Reporting
  3. Enter the relevant Tax Code.
  4. Press Enter on your keyboard which will pull through Tax Type and Tax Location
  5. Define whether the line is Input or Output Tax:
    • I = Input VAT (VAT Charged on Sales - Equivalent to AR/Sales Invoices)
    • O = Output VAT (VAT incurred on Purchases - Equivalent to AP/Purchase Invoices)
  6. Enter the applicable Net Value.
  7. Enter the Tax Value:
    • Rec Tax Value = Recoverable Tax Value
    • Non-Rec Tax Value = Non Recoverable Tax Value
  8. Enter the Tax Date if different from the journal date.
  9. Complete and post the journal.

Additional Information

Where available, the following information can also be entered:

  • Tax Transaction Reference
  • Tax Source Account
  • Tax Description
  • Tax Rate

This information improves reporting and audit visibility.

Generate the VAT Analysis

Navigate to:

Main Menu > General Ledger > GL Processes > Period/Year End Close > Tax Processes > GL Tax Analysis Reports 

Run the VAT extraction process for the required reporting period.

The process will:

  • Extract VAT reportable GL transactions.
  • Calculate VAT box values.
  • Produce VAT analysis information.
  • Generate VAT submission output files where configured.

Review the VAT Return Values

Review the generated VAT Analysis report.

The report provides:

  • Net Values
  • Tax Values
  • Recoverable VAT
  • Non-Recoverable VAT
  • VAT Return Box Values

Verify that:

  • Input VAT appears in the correct boxes.
  • Output VAT appears in the correct boxes.
  • Net values are reflected in Boxes 6 and 7 where applicable.

Result

The GL journal transactions are included in VAT reporting and contribute to the 9 Box VAT Return in the same way as Accounts Payable and Accounts Receivable VAT transactions.

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