Background

UK VAT registered businesses who had a VAT payment due between 20 March 2020 and 30 June 2020 were allowed to defer the payment until a later date, without paying any interest or penalties. Subsequent VAT payments due after that period were due as normal, but businesses have until 31 March 2021 to pay the deferred amount without incurring interest or penalties.

Repayment options

HMRC have announced a new VAT deferral payment scheme to help businesses repay the deferred VAT. Under the scheme, you can choose to pay your deferred VAT in equal instalments, interest free. You can choose the number of instalments that suits you, from 2 to 11, although the later you join the scheme, the fewer the number of instalments allowed.

If you meet the criteria specified by HMRC, which includes being up to date with your VAT Returns, you can join the scheme online between 23 February 2021 and 21 June 2021. 

This means to avoid interest or penalties, you have the following options:

• Pay the deferred VAT amount in full on or before 31 March 2021.
• Join the new VAT deferal scheme by 21 June 2021.
• Contact HMRC by 30 June 2021 if you need extra help to pay.

Find out more >

Recording your deferred VAT repayments can be done through manual entries or postings against your VAT nominal code(s). You can create a deferred VAT nominal code and transfer the balance from the VAT liability account, which would balance out as you post the bank payments or journals.

There are mainly two ways to record this in X3:

Option A

You can record your deferred VAT repayment as a bank payment against your VAT liability nominal code.

• In Sage X3 navigate to A/P-A/R Accounting > Payments > Payment/receipt entry
• Create payment and enter details in the usual manner. Change the date accordingly to reflect date of repayment

Option B

You can record your deferred VAT repayment by creating a payment journal directly into the general ledger. The journal can be created either as standard option 1 or recurring, option 2

1. Standard Journal 

• In Sage X3 navigate to Financials > Journals > Journal Entry
• Select New and enter relevant details for the repayment against the bank and liability account/s and create journal as normal

2. Recurring Journal

• Create recurring entries using relevant document types
• In Sage X3 navigate to Financials > Current Processes > Recurring entries
• Fill in relevant details and enter correct dates to generate and post journals for the period

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How to create a recurring journal in X3

Create two new document types to be used in the creation of Recurring Journal Entry

Parameters > Financials > Document Types

➢ GLRTP Recurring Journal (Template)

➢ GLREC Recurring G/L Journal (Actual)

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Create two new journal codes

Common Data > G/L Accounting Tables > General > Journal Codes

Create the two new journal codes to be assigned to the above document types and be used in  the generation of Recurring Journals

➢ GLT Recurring Template Journal GLRTP Recurring Journal (Template)

➢ GLR G/L Recurring Journal GLREC Recurring G/L Journal (Actual)

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Create Two new document types to be used in the creation of Recurring Journal Entry

Parameters > General Parameters > Sequence Number Definition > Structures

Create two new sequence number structures to be assigned to the above document types and be used in the generation of Recurring Journals

Sequence           Journal                 Document

GLT                        GLT                       GLRTP                   Recurring Journal (Template)

GLR                       GLR                       GLREC                  Recurring G/L Journal ( Actual )

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Create the Recurring Journal Template Journal

Parameters > Financials > Accounting Forms > Recurring Entries

Create a new Journal using the GLRTP document type. This journal must balance and should contain entries in the P&L and B/S. The B/S will hold a prepayment and the P&L will hold the release value for the prepayment. Ensure the G/L Recurring Journal (GLREC) is referenced back to the G/L Recurring Template Journal (GLRTP) in the configuration. The GLRTP journal contains the information/data to be released over the period(s) E.G. 2 Months, 12 Months or Longer. The GLREC journal is the actual journal that recurs on the periodic basis (stated above) and provides the entry into the trial balance.

Generate the Recurring Journal

Financials > Current processes > Recurring Entries>Recurring entries

In my example, journals are automatically created for 11 periods