Record Expense Claim

You can use this transaction to record a business expense claim. Note that in addition to a date in the header that is used as the tax point each separate line item transaction may have a date. This date is for memo purposes only.

Payment Type

Select how the expense claim is to be paid, cheque, online payment, to a directors' current account or via a payroll run.

Reference

Used to record the physical cheque number for a written cheque or a reference for the transaction if the payment type is not a cheque.

Account

If you have selected that the expense claim is to be paid by cheque or online payment then the account drop-down will contain a list of all active bank accounts.

Account

Select the Bank Account associated with the transaction.

A default may be displayed if it has been set on a Bank Account Details Record. This default may be overwritten.

To set a default, if it has not already been done, navigate to the Bank menu and hover over the Bank Account that is to become the default and click Configure Account.

Tick the Default Box and then SUBMIT.

Note there can only be one default so if another Bank Account was previously set as the default its status will be reset to be not the default.

If you have selected that the expense claim is to be paid into a Directors Current Account (for a limited company), a Members Loan Account (for an LLP) or via the payroll, the account dropdown will contain a list of the appropriate active accounts. Use Expense Claims for payment via a payroll run.

Add a Person as a claimant

An expense claim requires the relevant person to exist. A person is added via the Personnel menu.

Auto-complete field names

Rather than a drop-down to select from a list, simply start typing and the system will identify any occurrences of the combination of characters entered and you select from that shorter list. As an example, type 'able' and the system will offer:

Able Contractors

Capable Cleaning

Reasonable Roofers

etc.

Adding new customers / suppliers

If the combination of characters you enter does not provide any results, press tab and the system will know you need to add the customer/supplier and ask you to confirm the details. At this point add address, email contact etc if required.

Personnel - Manage Personnel - Click on the red + symbol

The line items that make up the expense claim now need to be added.

ADD ITEM button accesses the line item input.

SAVE ITEM button saves that line item in the screen. Clicking ADD ITEM button on each occasion allows user to enter further Line items. UNDO ITEM cancels the current line item data.

Record the completed claim by clicking the SUBMIT button.

Claimant

The claimant list contains any persons that are associated with the organisation, see above if a claimant is missing.

Amount

The amount is the value of the item associated with this transaction.

Purchase File Ref.

When a purchase type transaction is recorded by clicking the button a unique purchase file reference number is given to the transaction. This is in addition to the normal sequence number series that allocates an unique number to each transaction and is part of the audit trail.

The purchase file reference number starts from 1 and increments for each subsequent purchase transaction as it is entered regardless of the transaction date applied. The number can be used to write on the original document as an easy reference (rather than by transaction date) before physically filing.

The purchase filing reference number is assigned and shown in the confirmation dialogue when the transaction is submitted; up until that point "TBA" is displayed representing "To Be Assigned".

The purchase filing reference is displayed if the transaction is subsequently viewed or edited and can be used in the Find Transaction search facility at the top of the LISTS menu for easily locating a document.

Note, that not only is a Bill transaction given a Purchase Filing Reference so to is the subsequent payment transaction, as this may cover multiple payments or be a part payment. Also if a transaction is deleted the purchase filing reference number will also in effect be deleted and could result in a gap in the series.

Reverse Charge VAT

Reverse Charge Procedure (for services from foreign suppliers)

If you are a VAT registered business in the UK and receive services from suppliers in other countries you may have to account for VAT to HMRC. This is known as reverse charge. The system provides a procedure for dealing with this.

Enter the transaction normally and select an appropriate Standard Reverse Charge VAT rate that would apply if the purchase had taken place from a UK supplier. The appropriate entries are made to the VAT100 report and any VAT transaction reports.

The system impact is to add to the VAT control account an amount of output tax (as if a sale) calculated on the full value of the supply received, at the same time add (subject to the normal rules for deduction of input tax) the same amount of VAT as input tax to the VAT control account. The net impact on VAT is zero; additionally the VAT100 return also displays sales and purchase values in the appropriate boxes.

Domestic Reverse Charge

Domestic reverse charge is essentially an anti-fraud measure and applies to a range of goods and services transacted between UK VAT registered suppliers and customers and includes:-

For customer receiving a bill subject to domestic reverse charge

Enter the bill or payment in the normal way select an appropriate Domestic Reverse Charge VAT rate that would normally apply as notified on the bill. The appropriate entries are made to the VAT100 report and any VAT transaction reports.

The system impact is to add to the VAT control account an amount of output tax (as if a sale) calculated on the full value of the supply received, at the same time add (subject to the normal rules for deduction of input tax) the same amount of VAT as input tax to the VAT control account. The net impact on VAT is zero; additionally the VAT100 return also displays sales values in the appropriate box.

Note that the system distinguishes between domestic and non domestic reverse charge by the country stored on the supplier record.

Branch/Fund

If required select an appropriate branch or fund (in the case of a Not for Profit Organisation) to which the transaction is analysed.

Activity

If required select an appropriate activity to which the transaction is analysed.

Account

The account drop down list is used to associate the line item of a transaction with an account from the chart of accounts.

If nothing is displayed either
simply start typing an account name or ledger code and the system will provide a list of potential selections; choose the required account by clicking on it.
or click the Search icon
to display a list of document-type sensitive account possibilities. Note to change to other account-type options click the small down arrow at the base of the screen
If an account is displayed
In many instances once a third party (customer, supplier or employee etc) has been selected the account box will display a default learned account. For other associated learned accounts click the Search icon. Note to change to other account-type options click the small down arrow at the base of the screen

Net Amount

The net amount associated with the item.

When recording purchases, if you have a gross amount and want liberty to calculate the net amount and vat amount simply enter the gross amount in this field, select the appropriate VAT code, and type "g" in the VAT amount field.

VAT Rate

The appropriate VAT rate for the account must be selected. Default VAT rates can be associated with an account via the Account Maintenance screen which is available from the chart of accounts view.

If the business is on the HMRC Flat Rate VAT Scheme, as defined on the VAT details tab of the Business Profile, the VAT rate will default to "Out of Scope" for all purchase transactions. This can be changed if necessary. Exceptions may apply for purchases of capital assets of significant value, please consult your professional advisor.

Current VAT Rates

20.0%, 5% & Zero, used for normal UK VAT transactions.

Exempt

Used when a transaction is an exempt supply; such as the purchase of insurance. See the VAT Guide (Notice 700) for more details or visit the Revenue and Customs site at www.hmrc.gov.uk

Ended 31/12/2020 except for Northern Ireland - EU Acquisition

Used when you purchase goods from a VAT registered supplier in an EU member state. Make sure that the VAT code is set to EU Acquisition, and that the VAT amount shows the VAT which would have applied if the purchase had taken place in the UK. The correct country must be set on the supplier record to ensure correct reporting of the transaction.

No longer in use , kept for historical record only - EU VAT

Only used if you have you have incurred VAT in an EU member state, (i.e. local VAT). This CANNOT be recovered as input tax for UK VAT. You may make a claim for refund from the member state. A scheme exists to do this known as "Refunds of VAT in the European Community for EC and non-EC businesses" The details are in notice 723, refer to the Revenue and Customs site at www.hmrc.gov.uk Use of this VAT code is described more fully in the "VAT and Liberty Accounts" user guide.

Out of Scope

Used when a transaction is not in the VAT system at all. For example payments into a money purchase pension scheme are out of scope because they are equivalent to savings. Recording a payment of VAT to HMRC is a common example where Out of Scope should be used, as are salary payments and repayments of director loans. Using this code will result in no VAT reporting impact.

None

This code is used where there is no VAT on a purchase transaction, typically from a supplier who is not vat registered. This is not the same as zero rated, exempt or out of scope. The impact is that the value of the purchase is included in box 7 of the VAT 100 return.

20% and 5% Domestic Reverse Charge (Used on Sales Invoices only)

Use either of these codes when a sales invoice is being raised that is subject to domestic reverse charge VAT. This has the impact of not adding a VAT amount to the invoice total but annotates that domestic reverse charge applies.

Where domestic reverse charge apples to a customer (receiving a bill with domestic reverse charge notification) see the special note below.

Average

This code can be used where there the transaction is recording an aggregation of mixed VAT codes in a single entry with the VAT amount manually set as required.

Import VAT (Used on Purchases only)

This code is used if the organisation buys goods from outside of the UK for use in the business then it may use a system called postponed VAT that allows it to account for VAT on the VAT 100 return rather than paying VAT immediately at the point of entry. This is a potentially complex area and so we strongly advise you consult with your advisor.

Special Note - Reverse Charge VAT

Reverse Charge VAT

Reverse Charge Procedure (for services from foreign suppliers)

If you are a VAT registered business in the UK and receive services from suppliers in other countries you may have to account for VAT to HMRC. This is known as reverse charge. The system provides a procedure for dealing with this.

Enter the transaction normally and select an appropriate Standard Reverse Charge VAT rate that would apply if the purchase had taken place from a UK supplier. The appropriate entries are made to the VAT100 report and any VAT transaction reports.

The system impact is to add to the VAT control account an amount of output tax (as if a sale) calculated on the full value of the supply received, at the same time add (subject to the normal rules for deduction of input tax) the same amount of VAT as input tax to the VAT control account. The net impact on VAT is zero; additionally the VAT100 return also displays sales and purchase values in the appropriate boxes.

Domestic Reverse Charge

Domestic reverse charge is essentially an anti-fraud measure and applies to a range of goods and services transacted between UK VAT registered suppliers and customers and includes:-

For customer receiving a bill subject to domestic reverse charge

Enter the bill or payment in the normal way select an appropriate Domestic Reverse Charge VAT rate that would normally apply as notified on the bill. The appropriate entries are made to the VAT100 report and any VAT transaction reports.

The system impact is to add to the VAT control account an amount of output tax (as if a sale) calculated on the full value of the supply received, at the same time add (subject to the normal rules for deduction of input tax) the same amount of VAT as input tax to the VAT control account. The net impact on VAT is zero; additionally the VAT100 return also displays sales values in the appropriate box.

Note that the system distinguishes between domestic and non domestic reverse charge by the country stored on the supplier record.

VAT Amount

The amount of VAT charged on this item is automatically calculated based on the vat code selected but can be changed.

When recording purchases, if you have a gross amount and want liberty to calculate the net amount and vat amount simply enter the gross amount in the net amount field, select the appropriate VAT code, and type "g" in the VAT amount field.

Memo

The memo field can be used to enter free format descriptive text.

Document Storage

If a document storage option has been selected on the optional features tab of the Organisation profile then a symbol is visible.

Link to external document storage
indicated by link-16-grey or link-16-grey-attachment if a link has already been created. Click to view document, edit or delete the link.
Attachment for internal document storage
indicated by paperclip-16-grey or paperclip-16-grey-attachment if a document is already attached. Click to view or delete.

Date

Enter a date for the particular line item. This is a memo field only and is not required.

Charge to Customer

Associate an item with a specific customer if the item is classed as a reimbursable expense.

Occasionally expenses are incurred by your business on behalf of a customer to whom you will invoice the expense to recover it. By selecting to relate an expense in this transaction to a customer, a report can be produced that lists all reimbursable expenses that have been recorded. You may use this report to ensure that you have invoiced all those expenses to the appropriate customer.

The report is found under the Reports Menu.

Reports - Customers - Reimbursable expenses

Note that the option to do this is set the the organisation level by ticking the Tracking Rechargable Expenses on the organisation Profile. If the option is not selected, no customer selection drop-down is offered. To switch on navigate to the Organisational Profile.

Control - Organisational Profile - Optional Features

EC Member State VAT Flag

If the expense was incurred with a supplier from a non-UK EC member state please check this option.

When recording an expense claim the transaction is not associated with a supplier. Liberty Accounts will not know if the supplier is a non-UK EC member state for the purposes of VAT reporting unless this is indicated by the user.

The Expense Claim Output

The expense claim output shows the claim details and provides an area for the claimant to confirm the tax position by signature if required.


Paying the Claim via the Payroll

During Payroll run processing any unpaid expense or mileage claims may be imported into the payroll as pay elements for inclusion in the payroll run.

It is advised only users familiar running the payroll should undertake this function.

Once the Pay Run has been set click on IMPORT EXPENSES button. A screen then presents those expenses selected for payroll payment that are outstanding.

Those items to be included in an Expenses Claimed pay element (not subject to any tax or NI) and shown on payslips and net pay due are selected by ticking 'Add to Pay' on those items.

Action Box

Once an expense claim has been created and stored, a user Opening the transaction will see , just below the header area, an vertical-nav-24-compact-grey action box symbol. This provides quick access to: -

Print
to create a pdf of the expense claim for printing and subsequent emailing
Audit

to open a transaction audit report that provides a non-editable history of the transaction and its accounting impact. The report details which user recorded the initial transaction together with the date and time as well as the details of any subsequent amendments.

Delete
to remove the invoice. Note if a payment has been allocated to the bill or it has been included in a filed VAT return the delete option will not be available.