I've just taken over from a previous bookkeeper who, for reasons unexplained, classed all debit card purchases as T9 (using Sage Instant) and treated them as bank transfers between the debit card account and the bank current account.
Two immediate consequences:
Previous VAT returns did not reflect the true volume of purchases in the business; HMRC's "upward stats" would otherwise have included these trades. "So what?" you might ask, but HMRC might not look kindly on us.
My new client was done out of the chance to offset some of his output tax. As a rough estimate, the "missed input tax" amounts to about £650 since April 2012; there is probably more further back.
So, my queries:
How far back am I allowed to go to unearth these instances and correct them in the VAT Return I'll be making at the end of this month?
Do I have to inform HMRC of what I've found? (I don't think I do, from the HMRC website, since there has been no under-declaration of tax payable.)
Oh - one other thing! I stumbled on the Report in Sage Accounts which lists all the T9 transactions, but now I've lost it again. Can someone point me to where it's hiding please?
You can correct entries up to 4 years ago. Given the level of errors, you can adjust these on a VAT Return without notifying HMRC. If the overall effect is a recovery of underclaimed VAT, I suggest you do not write to HMRC. However, do ensure you keep an accurate record of the adjustments with the VAT summary. The VAT Notice is at http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageLibrary_PublicNoticesAndInfoSheets&propertyType=document&columns=1&id=HMCE_CL_000077#downloadopt
(Sorry, I don't remember where the T9 report in Sage is found. I would try the Financials Module first, though.)
A glance at last year's accounts shows the same effect. A meaningful amount of vat unaccounted for, particularly for a small business where cashflow is critical. (Yes - I finally ran that report to ground a few moments ago - It's at Company | Financials | Transaction Reports. )
