VAT reclaim using VAT 126 method

This method is commonly used by councils to reclaim VAT on all non-business purchases.

What details do I need to include on VAT Form 126?

  • The invoice date
  • The supplier’s VAT registration
  • The name of the organisation receiving goods or services on the invoice
  • A brief description of goods or supplies
  • The VAT amount

All of the above details are extracted from the Transactions recorded on the system. The follow the steps below to complete a VAT 126 claim efficiently:

1. Starting a Claim

  • Navigate to the Processes drop-down menu and select Generate VAT 126 Return.
  • A screen will appear prompting you to enter the date for the claim. Enter the date and click Show Details.

2. Reviewing and Validating Transactions

The system will identify all invoices with non-zero VAT dated up to and including the specified date. It will also verify whether:

  • The supplier has a valid VAT number recorded in the system.
  • There is an invoice date associated with the transaction.

If any issues are detected (e.g., missing VAT numbers), the problematic transactions will be highlighted in red.

  • Click the red highlight to open the Supplier screen and update the VAT number or correct other details.

3. Correcting Errors and Generating the Report

After resolving all errors, two options will become available:

  • Print Draft Report: Generates a draft version of the report for review. This report should not be submitted to HMRC but can be used for internal checks.
  • Save Claim: Finalises the claim, marks the included transactions as claimed, and prevents VAT from being claimed again on the same payments.

4. Submitting the Claim

After saving the claim, a new screen will appear, allowing you to:

  • Print a copy of the claim for submission to HMRC.
  • Export the claim to a spreadsheet, which can be used to generate a PDF or submitted as part of your claim.
  • You will need your  unique reference number and HMRC login for the claim.

5. Managing VAT Claims

Use the Manage VAT Claims option under the Administration menu to:
  • View the status of existing claims.
  • Delete a claim if amendments are needed before submission to HMRC.

    • 6. Recording the VAT Repayment

Once the repayment is received, record it using the Record VAT Receipt option under the Transactions menu.

Important: Do not use the general Receipts menu for this purpose, as it will not mark the claim as paid.