Payment

A payment transaction is one that occurs directly through the bank account, commonly :

These types of payments can be set up to be memorised transctions, and be recorded automatically, see Memorised Transactions for more information.

If an entity is not registered for VAT, then there will be no references to VAT in the displayed screens, also therefore ignore references to VAT in the guide below.

Setting up a Bank Account

In order to be able to record a payment a bank account must exist. On creation of the entity an initial bank account was set up. Additional bank accounts are set up as a custom accounts. To set up a bank account the following Information is required:-

Accounts - Add a Custom Account

Reference

Enter any reference to be associated with the transaction.

Type

Indicate the type of Payment transaction that you are entering by selecting from the drop down list.

The default selection is Payment.

Refund Received

If the transaction is a Refund of a payment make sure the box is ticked.

Date

Enter transaction date. The default is the current date. Note a difference VAT tax point date may be set if necessary.

Payee

The payee list contains any external entity, such as customers or suppliers, that are associated with the entity.

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.

Account

The bank account list contains all active bank and credit card accounts associated with the business. An entry from the bank/credit card account list must be selected when the transaction involves making a payment from, or receiving money to a bank or credit card card account.

Analysis Tab

Employee for P11d Purposes

Visible only if Personnel P11D Expense & Benefit Tracking has been selected in the optional features tab on the Organisation Profile.

Select an employee/director to whom this transaction is to be associated for P11D purposes.

Reverse Charge VAT

Tick this flag if you want to generate reverse charge VAT postings for a purchase.

Typically this is required for a purchase from a non-EU country where no VAT has been paid. It simply provides a means of accounting for the VAT that would have been paid if the good or service was purchased in the UK. Applying a reverse charge VAT process will have no impact on your VAT liability.

To use this feature simply set the VAT on the item(s) to the appropriate VAT rate(s) that would apply had the item been purchased in the UK and submit the transaction with the Reverse Charge VAT box ticked.

If you subsequently view the item you will notice that the VAT rate has been set by the system to "Out of Scope". This is correct. If you need to make changes to the transaction you must reset the VAT codes to the appropriate code so that the Reverse Charge can be created again using the correct VAT amounts.

Enter Transaction details

The line items that make up the payment value now need to be added. A line item is a value posted to an expense account extended by the VAT if appropriate.

ADD ITEM button accesses the line item input. Select the Item from the dropdown. Default values for VAT Rate (If VAT registered) are displayed. These defaults may be overridden. The system will extend the values and summarises them.

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.

If monies are sent to a Customer for some reason, perhaps to settle an outstanding credit note that cannot not be offset against sales invoices, use payments to place them on the customer account by, on the line item, selecting the customer account. Amounts will be visible on the customer ledger for the user to deal with subsequently.

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

Amount

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

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

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.

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.

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.

Special Note - Reverse Charge for Purchases From Non EU Countries

Typically this is required for a purchase from a non-EU country where no VAT has been paid. It simply provides a means of accounting for the VAT that would have been paid if the good or service was purchased in the UK. Applying a reverse charge VAT process will have no impact on your VAT liability.

To use this feature simply set the VAT on the item(s) to the appropriate VAT rate(s) that would apply had the item been purchased in the UK and submit the transaction with the Reverse Charge VAT checkbox ticked (Located in the "Analysis" tab of the voucher in the top half of the screen).

If you subsequently view the item you will notice that the VAT rate has been set by the system to "Out of Scope". This is correct. If you need to make changes to the transaction you must reset the VAT codes to the appropriate code so that the Reverse Charge can be created again using the correct VAT amounts.

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.

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.

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