How a nominal journal affects your VAT Return

You should only use journals that include VAT for transactions that:

Can't be entered using any other Sage 200 processes such as an invoices, credit notes, bank payments or receipts.
Don't affect the bank account.
Need to be included on the VAT Return.

When posting a journal with VAT, you must make sure the nominal account details contain separate lines for the net, VAT and gross values. This makes sure that the journal is included on your VAT Return correctly. In a single journal, you can have several lines representing each of these elements.

How does the VAT Type affect my VAT Return?

The VAT Type that you select for each line of the journal affects how it is recorded on your VAT Return.

N/A – Not applicable	The value will not be included on the VAT Return.
Input Goods	The value will increase or decrease the amount in box 7 of the VAT Return.
Input VAT	The value will increase or decrease the amount in box 4 of the VAT Return.
Output Goods	The value will increase or decrease the amount in box 6 of the VAT Return.
Output VAT	The value will increase or decrease the amount in box 1 of the VAT Return.

	Journal type
Box 1	Journal credit or debit to the Default Output VAT nominal account, with the VAT Type set to Output VAT, and a VAT Code of 0 – Exempt, 1 – Standard Rate or 2 – Zero rated. A journal credit will increase the value in this box, and a journal debit will decrease the value.
Box 4	Journal debit or credit to the Default Input VAT nominal account, with the VAT Type set to Input VAT, and a VAT Code of 0 – Exempt, 1 – Standard Rate or 2 – Zero rated. A journal debit will increase the value in this box, and a journal credit will decrease the value.
Box 6	Journal credit or debit to any nominal account, with the VAT Type set to Output Goods, and a VAT Code of 0 – Exempt, 1 – Standard Rate or 2 – Zero rated. A journal credit will increase the value in this box, and a journal debit will decrease the value.
Box 7	Journal debit or credit to any nominal account, with the VAT Type set to Input Goods, and a VAT Code of 0 – Exempt, 1 – Standard Rate or 2 – Zero rated. A journal debit will increase the value in this box, and a journal credit will decrease the value.
Box 8 or 9	It is not possible to affect boxes 8 and 9 on the VAT Return using journal transactions.

What are my default nominal accounts for VAT?

To check or change your default nominal accounts for VAT:

Open: Settings > Cash Book / Nominal Ledger > Default nominal accounts.

Go to the Balance Sheet tab.
View or change the default accounts for Default VAT Output and Default VAT Input.

See Enter or change default nominal accounts.

Post a journal

Open: Nominal > Enter Transactions > Nominal Journal Entry

Select New journal entry and Single entry.
Enter a Date and Title for the journal.
Enter the nominal account details for the net amount plus the following:
- VAT Type: Choose Input Goods or Output Goods depending on whether the journal represents a sale or a purchase.
- VAT Code: Choose the VAT rate for the journal.
- Debit / Credit: Enter the value excluding VAT.
Enter the nominal account details for the VAT amount plus the following:
- Code: Choose the appropriate VAT Input or VAT output nominal account.
- VAT Type: Choose Input VAT or Output VAT depending on whether the journal represents a sale or a purchase.
- VAT Code: Choose the VAT rate for the journal.
- Debit/Credit: Enter the VAT value.
Enter the nominal account details for the gross amount, pus the following:
- VAT Type: Choose N/A.
- Debit/Credit: Enter the gross value.
Click Post to save and post the journal.

Example

Suppose we enter a journal for a £1000 purchase (net) with £200 VAT.

Code	Name	VAT Type	VAT Code	Debit	Credit
2000	Creditor's control	N/A	0 - Exempt	0	1200.00
2200	Default VAT Input	Input VAT	1 - Standard Rate	200.00	0.00
6000	Default Purchases	Input Goods	1 - Standard Rate	1000.00	0.00

This affects boxes 4 and 7 on the VAT Return:

Box 4: 200.00 (increase)
Box 7: 1000.00 (increase)