Exit VAT on deregistration - what are the accounting entries?

[J7J]

Hi,

I have a client for which we have applied for deregistration of VAT.

So now you have to pay Output Tax (Exit VAT) on the value of your assets in your last VAT period.

What is the accounting entries for this transaction:

Dr. ???
Cr. VAT Control Account

Kindly advise.

Thanks so much.

[CLIVE-TRIANGLE]

You'd have to debit the cost of fixed assets.

However, your accounting policies most likely include the impairment statement, and by implication last year you said they were fairly valued. If that is the case, you would probably have to recognise an impairment loss equivalent to the amount, in the current year. Secondly, remember to properly describe the nature of the "addition" in the statement of cash flows. Lastly, the recognition of the increased cost will increase the wear and tear allowance in the tax calculation.