Make Deposits VAT Problem in 2003

[Page]

I've upgraded from 5 to 2003 and amongst the numerous VAT related problems I've had this is one of them.

To choose an "appropriate" example - I returned QB2002 to Intuit because some of the bugs made it unusable for me and so received a refund cheque.

Still working in 5

I used the make deposit window for entry of the cheque.
The amount was split into two lines - both with "Intuit" as the Received From name.
The first allocated the non VAT part against my Computing Expense Account.
The second allocated the VAT part against the VAT control account.
This seemed to me seemed the correct way of ensuring the allocations went against the correct accounts and all was fine.

Now working in 2003

Beacause of / Since the upgrade there is now an amount showing against the Intuit account equal to the VAT amount of that original transaction.

Did I do something wrong originally?
Or is it just part of the 2003 VAT mess?

What should I do?

[gibbo]

The problem comes from the way QuickBooks works with Tax Codes. It is not enough to simply post to the correct account. Income Tax reporting uses the Accounts, VAT reporting uses the Tax Codes. This allows you to report a transaction one way for Income Tax and a completely different way for VAT. Unless there is a tax code on a line, it will not report at all for VAT - but it will be in the correct account. The problem comes that you cannot use a deposit and have a VAT code. You need to create an item and bring the money in through a Cash Sale. Create the Item linked to the expense account and with the appropriate tax code. Leave the amount blank. now you can "sell" the item for ther amount you are depositing and by using the item, get the reporting correct. We have to do this particularly for interest received, for instance.

[hartford]

Hi Page
This is an example of the need to know accounting principles before using Quickbooks. Intuit does not of course believe this necessary. Frankly if you don't it's like driving a car without knowing how to drive. You'll be lucky not ending up in a mess.
Broadly speaking these are the steps you should have taken (I'm assuming you are using the purchase ledger (always preferable) and are using accrual VAT accounting. If not things are a bit different):-
Step 1 - enter the Quickbooks purchase invoice in the Intuit a/c in the purchase ledger. That created a liability to Intuit and charged the P&L with the ex VAT cost and the balance sheet VAT a/c with the input tax claim.
Step 2 - record the payment to Intuit. This probably happened before Step 1. You use pay suppliers routine. If you used your own credit card there are several ways of handling this. Note this step has no VAT consequence.
Step 3 - you return the goods. In an ideal world you get a credit note from Intuit. If you don't create your own dummy one and include VAT. Enter this in the purchase ledger. This performs Step 1 in reverse. It leaves Intuit owing you the VAT inclusive amount and clears off the P&L and the VAT.
Step 4 - you receive the money from Intuit. Enter this as a receipt into the purchase ledger (or I'm not sure can you make negative payments in pay suppliers?). Note also this step has no VAT consequence.
Some would say a lot of work but in proper accounting "the longest way around is the shortest way home"

[Page]

Thanks to you both for your replies.

Being a non accountant I have to "get into" the problem to get my head round it.

My next VAT head session is reserved for when the upgrade comes out so I'll try and sort it out then.