Recording 'rounding' of sales tax refunds

Sue2381

Hi, I'm completely baffled! I'm registered for VAT. As I'm trading outside the EU, I don't charge VAT. I do claim refunds of VAT on expenses. As the Gov rounds the amount I reclaim, up or down, I've created a 'VAT rounding' liability account to record the over or under payment of VAT refunds. Problem, if as a result of the Gov rounding, the refund is less than the amount of the VAT refund due, even though I've done a Journal entry to record the shortfall in the 'VAT rounding' account, the amount showing in Transactions is more than the actual amount received. For example, in July 2019, the actual refund due was 43.30 but I only received 43.00. Even though I recorded the 0.30 as a shortfall in the 'VAT rounding' account, the whole 43.30 shows as having been received in Transactions. On the other hand, in November 2019, the actual refund due was 23.66 but the refund received was 24.00. I recorded the over-payment in the VAT rounding account and the amount showing as having been received in Transactions is correct at 24.00. I don't know why the amount showing in Transactions is correct if the refund received is more than the amount of the refund due and incorrect if the refund is less than the amount of the refund due. I think I must be doing something wrong but I don't know what it can be. I've tried and tried to figure it out and I can't. Please can you help? Thanks. (If I'm posting this question in the wrong place please let me know and I'll try again. Thanks.)

AlexL

Hi @Sue2381 , for full transparency, Wave isn't compliant with VAT so there is a limit on what we can advise on in these situations. We highly recommend that you reach out to a CPA on these matters directly as they can have a serious impact on your financials.

One thing I may be able to illuminate for you (based on how you're using Wave) is why these numbers are appearing as such. You mention that the government sends you a text return of 43, but it shows up in Wave in your transactions page as 43.30. Can I ask how your transactions are being imported into Wave, and if they are coming through your bank statement, does it say 43 or 43.30 on it?

Let me know. Depending on how you get these transactions into Wave we may be able to point you in the right direction of why this is happening.