Introduction

In previous posts I’ve looked at how I post opening balances for various modules in Business Central. Links to these articles can be found below:

How I post opening balances for the General Ledger in Business Central

How I post opening balances for Fixed Assets

How I post opening balances for Bank Accounts

How I post opening balancing for Goods Receiving Not Invoiced (Expected Costs)

How I post opening balances for Sales and Purchase Ledger.

Today I wanted to discuss how I post opening balances for the VAT Statement when going live Mid VAT period.

Challenges Going LIVE mid VAT Period

If you are going LIVE with Business Central mid-VAT period, some of your VAT transactions will remain in your existing system. As a result, you won’t be able to submit your VAT return through Business Central, as it won’t include all the relevant entries. You could choose to use bridging software for submission, but you also have the option to post an opening VAT position via a journal entry.

This post will walk you through the steps to use a General Journal to record the VAT entries from your previous system enabling you to post your VAT statement from Business Central.

VAT Journal Example

To post the opening position, you’ll first need to gather the VAT figures for each box on the VAT statement from your existing system.

In this example, we’ll assume the following values have been collected from the existing system and are required for the various boxes on the VAT Statement:

VAT Box Number	Amount
Box 1 – VAT due on Sales	£10,000.00
Box 4 – VAT to reclaim on Purchases	£7,000.00
Box 6 – Total Value of VAT on Sales	£100,000.00
Box 7 – Total Value of VAT on Purchases	£70,000.00

To accommodate posting the journal we need to ensure we have a large value in the “Max VAT Difference Allowed” field in the “General Ledger Setup”

Then, to record the VAT entries we enter a General Journal as per below

Here’s a breakdown of the General Journal:

Step 1:
Enter the VAT General Ledger codes in the “Account No.” and “Bal. Account No.” fields. This ensures the entries have no impact on the General Ledger.

Step 2:
Select the relevant VAT Posting Groups associated with the boxes on the VAT Statement.

Step 3:
Enter the VAT amounts you want reflected on the VAT Statement.

When I now preview the postings for this General Journal I can see the amounts net each other out so there’s no affect to the General Ledger.

However this journal has created the following VAT entries which can be reported on the VAT Statement.

I’ll therefore post this and view the VAT Statement and I can see the amounts are being picked up correctly.

Conclusion

In the past, bridging software was commonly used when going live with Business Central mid-VAT reporting period. However, this post explains how to post a journal to record VAT entries when moving to Business Central midway through a VAT period.

Thanks for reading!