Goods-in parts appearing on Purchase Ledger with VAT included

This article explains why parts that have been booked into stock (goods-in) may appear on the purchase ledger with VAT already included, even if the actual invoice hasn't been officially processed. Understanding this scenario is important to ensure correct accounting practices, prevent confusion when reviewing purchase ledgers, and manage VAT correctly.

When does this happen?

This situation occurs specifically when you enter an invoice reference directly into the Goods-in window. Upon doing this, a prompt appears, requesting the invoice details. If at this stage you fill in the invoice values and do not select the option "I do not have an invoice," the system will treat this entry as a direct-posted invoice, immediately applying VAT and posting the entry to the purchase ledger.

What problem does this solve?

By allowing immediate posting to the ledger with invoice details, the process facilitates quicker accounting reconciliation, especially in scenarios where invoices are promptly available upon goods receipt. However, if used incorrectly or prematurely (when no invoice is available), it can lead to confusion regarding VAT reporting and the appearance of unexpected ledger values.

Typical Workflow

• Standard Process (Recommended):

  • Goods are received without entering invoice details.

  • Parts appear on the Goods Awaiting Nominal Invoice (GANI) without VAT.

  • Once the invoice arrives, it is processed separately, applying the correct VAT rate and posting accurately to the ledger.

• Immediate Posting Process:

  • Entering invoice details immediately when booking in goods.

  • Invoice information is posted directly to the purchase ledger, including VAT.

What if this was done by mistake?

You can either goods out the parts and process the invoice correctly, or post a credit note for the overstated VAT amount directly on the supplier account, when this is being cleared off select the credit note and the invoice.