Any transaction that has VAT or Tax on it should be going through the sub ledgers, such as AP and AR and not directly entered into the GL as a journal.

Below is a list of points that should be considered highlighting the issues that may be faced if the choice is to  still use journals to capture VAT.

  • Not possible to determine if it is a sale or purchase (credit) so cannot be used easily for any allocations or VAT returns
  • There are no determining factors on a journal for the tax engine to work so the tax is 100% manual
  • Tax has to be entered and calculated in a certain way or risk accidental posting to a VAT account but not reporting it causing reconciliation issues
  • Not linked to any recovery rates so all AP accounts have to be manually overwritten
  • No Security so can choose a tax rate from a regime that is not linked to the LE/OU and so whilst calculated would not be reported
  • importing journals from ADI can be difficult if the tax is required

please contribute to this list

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