I've just taken over the accounts for a local marketing business and carried on using their accounting system assuming they were accruals-based as all sales and purchase invoices were posted to the accounts according to their invoice date. I've just been told that until recently (end Jan), they were cash accounting so does that mean that their system from 1 Feb onwards, when they started using Liberty, is wrong? Do I now have to go back and repost the sales and purchase ledgers?
I'd do a VAT return. Then take a back up. Change the system to cash accounting. Do another VAT return and see what has changed. Then you will know what you have to do.
It is only when calculating the VAT return that the systems should look at either the invoice date or payments date to work out the VAT due.
If you do as Semsley suggests, you should see if any VAT has been paid/reclaimed that shouldn't have been. i expect most of the early transactions will have sorted themselves out by now.
