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Pro Forma VAT Invoices

This section contains additional information for processing pro forma VAT invoices.

Question

I received a pro forma VAT (Value Added Tax) invoice from a vendor. I need to pay the vendor immediately, but I cannot claim the VAT as recoverable until I receive the final VAT invoice. What is the best way for me to do this?

Answer

Enter a voucher with the total amount that you are paying the vendor on the pro forma invoice. Depending on your tracking and reporting requirements, you can treat it as non-taxable and give it a zero-rated VAT code. Otherwise, assign it a non-recoverable VAT code, and enter the cost and VAT amounts accordingly. Use this voucher to pay the vendor.

When you receive the final VAT invoice, you must complete one of the following procedures.

If You Already Paid the Vendor in Full on the Original Voucher

You now need to reverse the original voucher and enter a new one for the same amount to record the recoverable VAT to the proper VAT code. You can do this via the Reverse Posted Vouchers screen.

  1. Enter a positive voucher with the correct cost amount, the recoverable VAT code, the VAT amount, and the recoverable amount.
  2. Print a voucher edit report to verify that everything is correct on the reversal as well as on the new positive invoice.
  3. Post both vouchers to the GL. (After you complete the two correcting vouchers, you should have the correct final cost, the correct VAT amount on the proper recoverable VAT code, and the correct recovery amount recorded in Costpoint.)
  4. Select both of the correcting vouchers for payment. Use the Print/Void Checks screen to process the vouchers on a net-zero check or use the Manage Manual Checks screen to "pay" these two vouchers on a net-zero check.
  5.  Run the Post Cash Disbursements screen. This step is necessary to move the recoverable amount from the "recoverable suspense" account to the "recoverable" account.

If You Have Not Paid the Vendor in Full on the Original Voucher and Must Still Pay the VAT Amount

  1. Enter a voucher with the invoice total of just the VAT amount.
  2. Enter two lines on the voucher. Code them both to the original account/organization /project originally charged. One line should have a negative cost amount and the 0 % VAT code used on the original voucher. Doing this will exactly offset what was entered on the earlier voucher. If the original voucher was treated as Taxable = N, or assigned a non-recoverable VAT code, the negative line on this voucher should be handled the same way.
  3. Enter the second line on the voucher with the positive cost amount and the correct recoverable VAT code with the proper tax percentage.  Since each of the two lines on the voucher will be different from the voucher total, Costpoint displays warning messages asking whether you want to recalculate the cost or the percentage on the voucher line. Choose the option to recalculate the percentage. 
  4. You can now use the voucher to pay the remaining amount to the vendor by check, by manual check, or by EFT.
  5. Run the Post Cash Disbursements screen.

Following these steps creates a single voucher with a net zero cost, the correct VAT amount, and the correct recovery amount. This procedure also enters into Costpoint a reversal of the amount originally processed with a zero VAT code (or with no VAT code, or with a non-recoverable VAT code), and places that cost amount with the correct VAT code. Added benefits of following the above procedure include a good audit trail, proper VAT coding, and the correct calculation and posting of VAT and recovery amounts.