VAT Taxes in Rillet

Value Added Tax (VAT) is applied in countries such as the United Kingdom and various European nations. Unlike the U.S., where sales tax is charged only at the final sale, VAT is included at each stage of the production and sales process.

Invoices

When creating an invoice in Rillet, VAT can be added by toggling the tax option.

Customers can choose between:

• Exclusive VAT: The entered amount is net, and VAT is added separately.

• Inclusive VAT: The total amount includes VAT, meaning the net value is calculated accordingly.

Example:

• Exclusive VAT: If you enter £100 and VAT is 20%, the total invoice will be £120.

• Inclusive VAT: If you enter £100 as the total, the net amount before VAT is £83.33.

Contracts

Contracts in Rillet allow you to add VAT similarly to invoices. When creating a contract, you can activate the VAT option and select the appropriate type.

Once finalized, the VAT amount is automatically included in the invoice generated from the contract.

Quick Entries

In quick entries, the system defaults to inclusive VAT, as the total transaction amount cannot increase when using exclusive VAT.

To use VAT in a quick entry:

1. Go to Cash Reconciliation.

2. Select Bank Transaction > Quick Entry.

3. In the dropdown, select the VAT type.

4. Click Create and Match.

5. Select Matched to view the linked bank transaction and Rillet transaction.

   Note:

   • Quick entries always use inclusive VAT because the total transaction amount remains fixed.

   • In this case, if the total transaction amount is $37.62, using exclusive VAT would increase the expense, which is not allowed.

Journal Entry

Rillet allows users to include VAT when creating journal entries. See the general process for creating a journal entry and when dealing with VAT, consider the following:

• VAT Type: Select the appropriate VAT rate from the dropdown menu.

• Select Between Exclusive and Inclusive VAT:

  • Exclusive VAT: Adds a separate tax line item to the entry.

    Note: The system automatically reflects this adjustment, so if you input a net amount of £100 with a VAT of £20, the total will be presented as £120 without needing manual adjustments.

  • Inclusive VAT: Applies a VAT tax reclassification that automatically adjusts the amounts.

    Note: The total amount entered already includes VAT, streamlining the entry process.

Verify the debit and credit amounts to ensure the entry balances. Once finalized, VAT will be reflected in the relevant accounts.

Automated Accounting Records in Rillet

Rillet automates the accounting records of transactions with VAT. When invoices or contracts are created, the system automatically reflects VAT in the respective accounts, such as accounts receivable or accounts payable. This ensures accurate financial reporting and compliance with VAT regulations.