Sorry to trouble with such a basic item, but I thought I'd best get it right.
I've volunteered to help out our local club put together their financial records after a preiod of 3 years of shakey bookkeeping and I'm now facing a time span including
·financial mismanagement
·incorrect bookkeeping
·incomplete records
·criminal activity
and I've got to go back 3 years to recreate records oh what fun!
The entity operates as a members club, (but over the last 3 years now has incomplete records of its membership) and runs a bar which general members of the public can also use.
VAT
Qn1 in retail sales where the till roll has errors (over/under rings) and the cash takings <> till roll on a daily basis, is the input VAT declared on
1.the Till roll numbers, regardless that there are errors?
2.An adjusted till roll number that removes the impact of error?
In the case of someone giving out the wrong change I can see that it makes sense that it is our issue and we have to pay HMRC regardless, but what if someone rings in a sale of £100,000 by mistake? Surely we dont declare VAT on that.
Qn.2 If its okay to adjust Input VAT for errors then the next question becomes:
1.Whats the threshold?
NB - We dont have any large fat finger items right now, just that the till is short a few pence/pounds on various days. How do I figure out which are valid VAT adjustments and which are our liability because we gave out the wrong change?
Sounds like you have your work cut out for you! :)
Q1: I believe that you have to account for what the till roll actually says, as you mentioned, even if the customer was under/over changed because you have still made a taxable supply for x amount regardless of operator errors.
With the example of that massive error, should you come across any - I'm under the impression that you wouldn't have to declare the output tax - I came across this paragraph on the HMRC site;
"Your till roll or other record of sales constitutes your Daily Gross Takings, and it is this figure which you must use when calculating output tax due.
However, you may reduce your Daily Gross Takings for the following reasons:
* Supervisor's float discrepancies * Till breakdowns (where incorrect till readings are recorded due to mechanical faults, for example till programming error, false reading and till reset by engineer) * Void transactions (where an incorrect transaction has been voided at the time of the error)."
So I would definately keep proof of why there is a massive difference, but only declare output tax on what the figure should have been.
Q2: If the net value of the errors works out to be less than £10,000 then you can put an adjustment through on the current VAT Return*, anything between £10,000 and £50,000 and you need to send in form VAT 652 explaining the differences.
*If the mistakes were deliberate/concealed (which may well be the case if, as you mentioned, criminal activity was occurring, then VAT 652 should be used instead of just correcting it yourself but I would definately also contact the VAT helpline).
To be on the safe side, it's probably better to contact the VAT helpline before you start because it sounds like there will be a few problems.
