Assume that a company employee has expenses refunded at long intervals (perhaps once a year) to save issuing (e.g.) many small cheques. Say he/she buys something VATable at standard rate, a meal say. The company (which handles VAT on an accruals basis) then has a General Journal transaction input with (presumably...) a debit to a 'subsistance expenses' account and a credit to a 'company owes employees' account, with the VAT broken out into the VAT Control account. Both sides of the transaction appear in the detail underlying the VAT 100 and cancel each other out. Only when the employee is actually paid does the VAT (and ex-VAT purchase amount) reappear within the VAT 100.
Three questions - if anyone could enlighten me pls:
a. Is this the correct accounting treatment, or am I (or my Quickbooks - but most likely me) up a gum tree?
b. Since the payment may be in a later VAT period than the invoice date, the invoice is not being included in the VAT 100 appropriate to its date. IS this right?
c. The employee is naturally not VAT registered. Should the credit to the 'company owes employees' account be 'net plus VAT' or 'gross'?
Apologies in advance for naive questions!
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