Schools are advised to process the invoice on FMS based on the Invoice Total requested by the Company selecting the VAT code 'VAT Exempt on Expenditure.'
Two cashbook journals should then be processed on FMS.
The first cashbook journal should reverse the amount paid to the company above by CR the expenditure code used for the invoice and selecting the VAT code 'VAT Exempt on Expenditure.'
The second cashbook journal should include two lines, in the first DR the expenditure code used for the invoice for the FULL amount of the invoice without deducting the rebate selecting the VAT code 'VAT on Expenditure 20%.' The second line of the cashbook journal should CR ledger code 81210 with the amount of the rebate selecting the VAT code 'Zero rated VAT on Income'.
The two cashbook journals will result in a CR and matching DR on the bank statement on FMS which can be reconciled against each other.
A calculator to assist with the calculations for the second Cashbook Journal can be found here.
Should you have any queries regarding this please contact the Finance Helpline:
tel 03456 037684 , firstname.lastname@example.org