Cash accounting


If you create an unallocated receipt or payment, you can declare a VAT amount upon running a VAT return. Head to the VAT return menu on the Reports > All > Popular reports > VAT return menu.


The VAT return will pick up all unallocated receipts and payments based on the payment date.


If you declare a VAT rate which is different to that of the invoice you allocate to in future, the system will create an adjustment when you next run the VAT return to compensate if appropriate.


Invoice accounting


Advance payments need to be included on VAT returns. You can read more about Advance payments on the HMRC website linked below:


https://www.gov.uk/guidance/vat-instalments-deposits-credit-sales#advance-payments-and-deposits


If you declare a VAT rate which is different to that of the invoice you allocate to in future, the system will create an adjustment when you next run the VAT return to compensate if appropriate.