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Using TurboCASH

 







TAX
VAT ACCOUNTING BASIS
  
The Accounting Basis, on which you are registered for VAT will be indicated on the VAT Registration Certificate. The Accounting Basis on which you may be registered for VAT, are the Invoice Basis and the Payments Basis. Most Vendors will be registered on the Invoice Based method. Some Vendors may be registered on the Payments Basis, if they apply in writing to the Tax Authority and they do qualify.

You need to pay Tax (VAT) for each Tax period. Some Vendors may pay on a monthly, two-monthly basis, six-monthly basis, etc. as appearing on your Registration Certificate. The Accounting basis will determine the methods or basis to use when you need to calculate the VAT (Output VAT) you need to pay and the VAT (Input VAT) you may claim.

If you are registered for VAT, you need to select the Tax method as Invoices based or Payments Based on the Setup - System Parameters - Company Info (Options button) in TurboCASH.

 

To following example illustrates the invoice based and payments based accounting basis for VAT:
We sell a Drill Press for an amount of 1 140 including VAT (1 000 x 14%) in the first Tax Period. We receive half of the payment (570) in the first Tax period and receive the other half of the payment in the second tax period.


Invoiced Based

If you are registered on the invoice basis, you must pay the VAT when you issue an invoice or invoice your debtors, whether or not you have received any payment. Should you receive the payment, before you issue the Tax Invoice, you still need to pay the output tax.

On the other hand, you may also claim the input tax when you receive a tax invoice from your creditors, whether you have paid the creditor's tax invoice or not.

In our example we would have to submit the full VAT to the amount of 140 on our VAT return (1 140 x 14/114) and pay it over to the Tax Authorities at the end of the first Tax period.


Payments Based

If you are registered on the Payments basis, you must pay the tax when you receive the payment or part of the payment.

On the other hand you may only claim the Input Tax for the amount or part of the amount that you have physically paid for your purchases or expenses.

The our example we would only pay the VAT for the payments actually received in each tax period at the end of each respective tax period and is as follows:
1.At the end of the first Tax period - we would have to submit the VAT for the payment received of 70 on our VAT return (570 x 14/114) and pay only the VAT for the payment received over to the Tax Authorities. 
2.At the end of the second Tax period - we would have to submit the VAT for the payment received of 70 on our VAT return (570 x 14/114) and pay only the VAT for the payment received over to the Tax Authorities.
At the end of our second Tax period, we should have paid the full output VAT to the Tax Authorities