Vat on purchases not to be added to Vendor account but credited to a separate GL account

[Boris10]

We have a new requirement in our country, whereas our company is not supposed to pay VAT portion of the vendor invoices to our vendors. So i was asked to instead credit a GL account with the VAT portion.

Is this possible?

So this is our scenario right now:

GRV:

Dr Inventory      100
  Cr Clearing          100

Invoice:

Dr Clearing 100
Dr Vat      16
     Cr Vendor   116

So instead what i am asked to do is to:

Dr Clearing 100
Dr Vat      16
   Cr Vendor       100
   Cr GL account   16

while keeping the rest of the transactions the same. Therefore, in Accounts Payable Vendor is supposed to have an amount of 100 instead of 116.

 

[DjangMan]

Just to confirm, if I invoice you for 100 and the VAT is 16% (therefore invoice total is 116), you'll pay me 100 and remit the 16 to the taxation authority on my behalf? And until you pay me - my account shows that you only owe me 100, not 116, right?

 

[Boris10]

That is correct, we are only supposed to pay vendor 100 and 16 goes to VAT account.

 

[ettienne]

There is no way to do that automatically, you will have to do some manual entry.

Sage 300 Certified Consultant

 

[Boris10]

Thank you ettiene!

 

[DjangMan]

Most companies would be adding a line for VAT to the purchase order instead of letting Sage calculate the vendor's taxes because of potential differences in how tax is calculated.

A negative tax line (using a different non-inventory code) would let you re-direct the amount to a different GL account:

[pre]
Goods Db Inventory Cr Vendor Control 100
Tax Db VAT Cr Vendor Control 16
NTax Cr Someacct Db Vendor Control -16

Net transaction:
Db Inventory 100
Db VAT 16
Cr Vendor Ctrl 100
Cr SomeAcct 16
[/pre]

There might be something that I've forgotten or not considered so please test. Lots.