Can I pick someone's brains please. I have a new client who uses Cash Accounting in Sage. I've no experience of using this so would welcome some advice.
What's bugging me is the balances on the Input and Output nominals are far too high i.e Sales Tax is within £10k of Trade debtors - say £90k and £100k respectively.
My problem is I'm trying to get my head round how this has happened. In my mind, the Sales Tax balance should be equal to the Vat element of Trade Debtors, all sales are vatable btw.
The previous accountant hasn't run the vat transfer wizard ever. Is this correct?.
So does anyone have any advice on how to reconcile the control accounts after a vat return?
Does anyone do this?
Thanks
-- Edited by ADAS on Wednesday 6th of April 2011 09:42:11 PM
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Tony
Responses are intended as outline only. Formal advice should be sort from your Institutes Technical Department or a suitably qualified Accountant.
I use Cash Accounting at one client. With cash accounting the difference between the sales tax control and purchase tax control will not be the VAT due as in standard VAT accounting because some invoices (both sales and purchase) will have been entered but not paid.
I always do a journal (I don't like wizards) after every VAT return.
As not all our sales are std rate so I add up the VAT on the debtors and this should equal the sales tax left after the VAT return has been done. But this is relatively easy as there are not hunreds of transactions. Do the same with the creditors.
Don't know if this is of any help.
-- Edited by semsley on Wednesday 6th of April 2011 09:53:21 PM
The way you do your journal, is how I'd expect / hope Sage would handle the "wizard". I appreciate that sales - purchase tax doesn't equal vat return. But I'd expect the Vat element on Trade Debtors - Vat element on Trade Creditors = potential liability for the next return? IF I've phrased that properly ?!?!?
Please take this in the spirit the comment is meant, but I admire the fact you use a journal and don't rely on a wizard
__________________
Tony
Responses are intended as outline only. Formal advice should be sort from your Institutes Technical Department or a suitably qualified Accountant.
Agree the VAT on debtors and VAT on creditors should equal sales tax and purchase tax after the return has been done, but it's not simply taking the debtor and creditor figures and extracting the 20% 'cos some may be zero, some maybe 5%. Also you might still have some 17.5% depending on the age of the debtor/creditor. Only today I had a payment from a December debtor.
However, to be as far adrift as your client seems to be suggests that there is something historic wrong. The only way to check this would be to trawl through the detail reports and check back. If a mistake up to £10K either way has been made you can put through an adjustment although, from memory I think you can only go back two years.
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