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hi ive set unrealised vat on the general ledger setup, then have created two unrealised vat accounts on the chart of accounts one for sales one for purchases, then have gone into each vat posting group and put the unrealised vat account for both purchase & sale in the unrealised vat account selection boxes. However vat postings are still being posted straight to the normal vat account.......
also is it viable to just set up one vat account for all vat, leave the category & subcategory blank & mark credit/debit as both? and all the product posting groups for both sales & purchases post to this account?
Hi Charster23
Your setup looks good, however missing one key ingredient. For VAT Posting Setup lines you want unrealized VAT to be posted you need to set Unrealized VAT Type field to something other than blank (percentage most frequently used one). It is used to determine how VAT recognition will be handled in case multiple payments are applied to invoice that contains unrealized VAT.
For example: setting unrealized VAT type to percentage will realize VAT equal to percentage payment covers the invoice. Let's say you have and invoice of 120 GBP (20 GBP being unrealized VAT) and receive payment of 60 GBP for this invoice. 60 GBP is 50% of the invoice, hence 50% of VAT will be realized, that equals to 10 GBP.
Regarding one VAT account, I'd recommend to use G/L account per VAT rate per Sales/Purchase as it makes life easier reconciling G/L to VAT and if I remember correctly most EU countries require you to do this this way due to reporting requirements. For unrealized VAT it might make sense to use one for sales and one purchase.
Regards
Ivan
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