Adding Journals to pickup VAT Amounts in different Currencies

The MTD VAT Module in Eclipse will only run over the GB Currency and will not do any conversions.

If you are paying VAT on non-GB expenses you will need to create a journal so these are picked up by your MTD and VAT module. 

1. First you will need to convert the NET and VAT amounts into GB Currency. 

eg US$182,000 cast Fees + US$36,400 VAT

We need to convert this to GBP.

£140k worth of Cast Fees and £28K of VAT on those Cast Fees

Note: Special rules may apply to what exchange rates you need to use to do the conversion so please seek professional advice.

2. You will then need to add a £0 Net Journal so the MTD Module will pickup these GB VAT and NET amounts.

Please note that the transaction number for the entire journal needs to be the same or this will not work. The system uses the transaction number to link the transactions.

It doesn’t really matter what code you use as long as the Vat is in the Vat account and the net value in each account is zero. What we are doing is manipulating the flags but not affecting the totals. The VAT submission will be correct but it won’t match your BWS as the liability still sits in another currency.

eg
Tax Code V - Account E01A – Cast Fees £140k

Tax Code Z (out of scope) - Account E01A – Cast Fees (£140k)

Tax Code V -140-01 – Vat on Exps £28k

Tax Code Z (out of scope) - 140-01 – Vat on Exps (£28k)

If you want the BWS VAT total to match the VAT submission you would need to transfer the amount from the other currency via the currency clearing account. In that case the jnl would look a bit more complex.

GB Tax Code V - Account E01A – Cast Fees £140k

GB Tax Code Z (out of scope) - Account E01A – Cast Fees (£140k)

GB Tax Code V -140-01 – Vat on Exps £28k

GB Tax Code Z (out of scope) - 600-01 – UK Currency Clearing (£28k)

US Tax Code V -140-01 – Vat on Exps -$36k

US Tax Code Z (out of scope) - 600-01 – US Currency Clearing (£38k)

US Tax Code Z (out of scope) - Y01A-01 – Exchange Gain/Loss £2k

The last line will depend on if you use the budget ex rate or have to use say average ex rate in which case you will have a gain/loss. The 2 currency clearing accounts should balance each other out when the budget ex rate is applied.

It is important that the Net and VAT amounts are flagged with V, and the other two amounts are flagged with a non-VAT out of scope code.