Reclaiming forgotten VAT

If you have bought something in the past and did not realise you could reclaim VAT on it, you can make an adjustment to reclaim that on your next VAT return. But PLEASE do check with HMRC on the rules. There may be a limit as to how far back you can go etc.

To reclaim the VAT and adjust your P&L you will need to make 2 Purchase Transactions. For the pursposes of this example we will assume a purchase total of 115 with an unclaimed VAT element of 15. We will also assume it was paid for with cash (but the From account does not matter for the two transactions provided they are the same as they cancel each other out). The To side will be the account you used in the original transaction:

1. From Cash To Meals 15 ‘All VAT’ code
2. From Cash To Meals -15 ‘Non VAT’ code

N.B. the 2nd transaction is negative.