Opening Balances of Tangible Fixed Assets

If the business is using tangible fixed assets (Machinery, Computers, Vehicles etc.) then the trial balance will include amounts for the value of these assets. The value of these assets will have to be entered as opening balances for the original cost or valuation of the assets and the cumulative depreciation.

The input screen for Tangible Fixed Asset opening balances is accessed via the Tangible Fixed Assets element of the Opening Balance Control Panel

Control - Opening Balance - Add Fixed Assets

Fixed Assets must be allocated to Funds and/or Activities if required. It is recommended that data is entered for each individual asset; if this not possible then an aggregation may be used. Please consult your accountant or advisor if you are unsure.

Add Fixed Assets

This screen is used to create and maintain details about an asset including, where appropriate, the purchase. Accessing this screen via the opening balances control panel allows for details of assets to be entered as opening balances.

Some useful background information is available from Tangible Fixed Assets and an Asset Register

This screen consists of multiple tabs as follows: -

ASSET DETAILS
The asset name, description, acquisition date and date in service are entered together with any analysis that is appropriate
COST/VALUE
Original cost, estimated useful life and any residual value is entered; any revaluation amounts are displayed.
DEPRECIATION
A depreciation rule and parameters are set. In the case of an opening balance, the cumulative depreciation amount at the date of the opening balance is entered.
ACCOUNTS
Will usually remain as the default accounts, however where there is a user defined fixed asset grouping of accounts (Set up as Custom Accounts) this tab allows for setting up of posting to those accounts.
PAYMENT
When a newly purchased asset is being added to the asset register the posting details of the purchase may be entered simultaneously using this tab. If preferred a user can also enter the purchase subsequently as a normal purchase transaction.
DISPOSAL - only visible once an asset has been set up on the register
When an asset is disposed of enter any disposal value, the date of disposal and any P11D links

Asset Name

Enter a unique name for the asset or asset pool. This is required.

Asset Description

Enter description of the asset if required in addition to the name.

Asset Type

Select an appropriate asset type. This is required. The types of asset offered in the drop down list are associated with rules of depreciation and the calculation of capital allowances for taxation purposes. Accurate selection will enhance the accuracy of your accounts. If you are not sure which type to use then you should consult your advisor.

Statutory Reporting Area

Select a statutory reporting area for the asset. If you are not sure which area to assign to your asset you should consult your advisor. This is required.

Fund, Department and/or Activity

Where Department, Fund and/or Activity analysis is being used the asset may be allocated using the drop-down fields. System computed depreciation associated with the asset will be analysed to the selections.

Date Acquired

Enter the purchase date of the asset. This can be done manually (e.g 19/12/2016) or click on calendar icon to select date from the calendar. This is required.

Date In Service

Enter date asset entered into service. This can be done manually (e.g 19/12/2016) or click on calendar icon to select date from the calendar. This is required.

An asset is brought into service when it starts to be used for revenue generation purposes, therefore the date into service is not necessarily the date acquired. Assets are depreciated from the date into service not the date of acquisition.

Short Life Asset

Currently unused

P11D Classification for Employee Use - P11D Section L

If this asset is likely to made available for employees/directors to use in a private capacity, there may be a P11D income tax liability on the employee/director.

In reporting the P11D an asset classification is required, select the appropriate classification for this asset from the dropdown list.

Note setting this classification does not mean a P11D return will be created, this requires that the asset is allocated to the employee/director for a period and with a value, in the asset allocation screen.

If your are unclear as to the meaning of this, you are strongly advised to seek professional advice.

Original Value

Enter the original value of this asset net of VAT. This amount will be created as a liability in the Asset Additions Account and the VAT element is taken care of as part of the purchase transaction. This field is required.

Estimated Useful Life

Enter the estimated useful life of the asset in years. If you select the straight line depreciation rule this value is used for depreciation calculations. If you select the reducing balance rule this value is used to calculate a suggested reducing balance percentage which you may override. Check with your accountant is you are not sure what value to use. This is required.

Estimated Residual Value

Enter an estimate of the likely value of the asset after its useful life has expired. The default is zero. This is required.

Additional Expenditure

Enter any additional expenditure associated with the purchase of this asset, e.g. solicitors fees on purchase of a building. The amount will be added to the purchase cost of the asset for depreciation and net book value calculation purposes.

Revaluation

If an asset has been revalued this field will show the revaluation value of the asset.

Date Revalued

Displays the revaluation date for an asset if it has been revalued.

Where it is necessary to Re-value or Impair the value of an asset navigate to the Control menu.

Control - Batch Jobs - Revalue/Impair Asset

For more information on this topic see Re-Valuing/Impairing a fixed asset

Depreciation Rule

Select straight line or reducing balance depreciation rule as appropriate for the asset and your accounting policies. This is required.

Straight line depreciation allocates the amount to be depreciated in equal amounts over the life of the asset. Reducing balance uses a constant percentage amount for each time period which has the effect for depreciating more in the earlier time periods.

Reducing Balance Percentage

If the reducing balance depreciation rule is selected this field is used to define the annual depreciation rate used in depreciation calculations.

Cumulative Depreciation - used when entering opening balances

If you are setting up opening balances for assets you should enter the value of cumulative depreciation for the asset at the date for which you are setting up opening balances. This will ensure that further depreciation of the asset can be calculated properly. This is required.
For more information see ' Entering opening balances - Fixed Assets' process

Cumulative Depreciation Date - used when entering opening balances

If you are setting up opening balances for assets you should enter the date at which the cumulative depreciation was calculated. This can be done manually (e.g 19/12/2002) or click on calendar icon to select date from the calendar. This is required.

The Accounts tab will only be used where there is a user defined fixed asset grouping of accounts (Set up as Custom Accounts). The tab allows for setting up of posting to those accounts.

Disposed

Check this box to indicate that the asset has been disposed.

Disposal Value

If you have disposed of an asset enter the amount received. This is required if an asset is disposed.

Date Disposed

If you have disposed of an asset enter the date of the disposal. This can be done manually (e.g 19/12/2002) or click on calendar icon to select date from the calendar. This is required if an asset is disposed.

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.

Asset Transfer Type - P11D Section A

The P11D return requires a description of the type of asset being transferred to the employee/director. Select the appropriate type from the dropdown box to be displayed on the P11D.

If your are unclear as to the meaning of this, you are strongly advised to seek some professional advice.

The Accounts tab will only be used where there is a user defined fixed asset grouping of accounts (Set up from Add a Custom Accounts). The tab allows for setting up of posting to those accounts.

The payment tab records the purchase process for the asset. Note that the payment will deal with the main asset purchase not any additional expenditure added in the cost/value tab.

Payment Document

Select the payment document type.

Selecting a Bill will prevent a user from choosing a Bank Account in the Payment Account, as a Bill will posted to the Supplier Account.

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.

Reference

Enter any reference to be associated with the transaction.

Payee

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

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.

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.

Refer to Add Fixed Assets for more details.