Growcash type loans
If you are operating a cash-based book keeping system, you may wish to claim the VAT back on large invoices for fertiliser, chemicals, etc. but not pay the invoice until some point in the future.
This involves setting up a 'growcash' type of loan which will pay the invoice off in the future, but will allow the VAT to be claimed now.
- Set up a heading code within the current liabilities band called "Growcash loan" (or a name that is appropriate). It should be given a VAT status of N.
- Within data entry enter a cash analysis cheque with a total value of the first payment.
- Enter the total amount of the commodity being purchased, either allocated directly to the appropriate enterprise or put into store (if used). The total VAT will be calculated and hence claimed.
- On the same transaction, enter an additional item coded to the current liability code set up for this loan. Enter the total amount of the loan outstanding as a contra (i.e. as a minus). This will transfer the amount left to be paid in the future to the liability code.
- The net total of the transaction should now equal the value of the first payment.
- Subsequent payments should be made to the supplier but the current liability code should be used rather than a purchase code - remember to code any interest payments separately to an appropriate overhead code.
For more help on Farm Business Manager call our Adviceline team on 01594 545022 or email us at support@farmplan.co.uk.
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