I am in a quandry regarding how to post something into Sage.
I am preparing our annual accounts and when I get stuck I cannot focus on anything else.
Here is the problem:-
Last year. a director in the business (and we are both guilty of doing it) paid £28.44 out for their fuel with the business bank card (because their own card would not work for some unknown reason).
The same day, they paid for parking of £1 out of their own cash and £5.90 for some postage, again, out of their own cash.
The following day, they paid £21.54 cash back into Petty Cash.
Sounds simple? I simply cannot get my head around it.
So I have opened up the Practice Company in Sage to try and figure it out.
Here is what I did:-
Nominal Codes Used:-
1200 Bank Account
1231 Director's Private Money Introduced
2335 Director's Loan for particular Director
JC - Journal Credit
JD - Journal Debit
Business pays for fuel - £28.44 JC 1200 JD 1231 T9
Director effectively borrows money from business for a day - £28.44 JC 2335 JD 1231 T9
Director pays for postage - £5.90 JC 1231 JD 6901 T9
Director pays for parking - £1.00JC 1231 JD 7400 T1
Director repays outstanding money owed to business for fuel into Petty Cash - £21.54 JC 1231 JD 1230
Apologies for the detail.
Now - I am sure that is wrong somehow.
What I cannot get my head around is whether the receipts for any of this need entering separately or has this process taken account of that?
There is also a couple of VAT elements involved.
I have probably also got my tax Coding wrong. The postage should be T2 and would be if I did a BP and this is unclear to me until I know whether the receipts are to be entered elsewhere.
I have well and truly 'got my knickers in a twist' with this.
Help would be very GREATLY appreciated.
EDIT:-
And the other thing I was thinking was could I set this off against the 7400 Mileage Allowance Payment that would be made to this Director for the 290 miles journey they made that day by posting:-
BP 1200 7400 T9
or
JC 1200 JD 7400 T9
-- Edited by Rhothgar on Sunday 21st of July 2013 12:58:34 PM
Just to confirm, we use our own personal cars for business travel and the company only pays us Mileage Allowance Payments (currently we claim this at the 45p per mile rate and we do not cover more than 10,000 miles per annum)
Having read the other thread, it wouldn't appear to be a massive amount that the company could claim back on VAT receipts but it does still state company car.
What normally happens is, we fuel our private cars with our own private money (there are many instances where we will not have kept the receipts for this).
In that case, it is impossible for us to differentiate or apportion the amount of VAT that would be applicable.
Or would it be a case of finding a receipt for fuel and looking at the date and trying to ascertain how many miles were covered on the fuel used based on the Applied MPG for the engine size bracket and then working backwards to apportion the private and business mileage in the number of miles calculated to have been covered for that receipt? Sounds quite labour intensive.
e.g. the director filled up 18.35 litres on that particular receipt (although we do not seem to have the VAT receipt for it and so cannot claim but please bear with me)
18.35 litres = 4.036434 UK Gallons
The correct rate for 6th March 2012 is 15p.
I cannot find the Applied MPG anyway for 2012 - Is this irrelevant for the calculation? I was thinking that if we do not have every VAT receipt for private fuel used then we would have to calculate the distance which could be covered by the fuel tanked.
With those 4 Gallons, the director concerned would never have completed the 290 miles journey and they would have already had fuel in their tank and the £28.44 was a top up.
However, would this mean we could claim VAT back as follows regardless of the fact the not every VAT receipt was retained?
290 x 0.15 = £43.5 / 6 = £7.25 VAT
The VAT on £28.44 is only £4.67 so if we do not have all VAT receipts from directors then surely we cannot claim for mileage covered which is actually greater than the Applied MPG for the fuel tanked.
This sounds complex. I hope you understand where I am coming from and haven't lost the will to live!!
-- Edited by Rhothgar on Sunday 21st of July 2013 04:27:52 PM
-- Edited by Rhothgar on Sunday 21st of July 2013 04:41:22 PM
You don't know the director concerned. If we have that one VAT receipt for £28.44 for the whole year, we'd be lucky!
Therefore, not too sure if it is worth my time looking at the VAT reclaimable for that director. HMRC would not be too pleased if we claimed back VAT of £7.25 on the fuel used for that one journey alone if it turned out we could only find a VAT receipt with a £4.67 VAT element on.
PS Would it be safe to pool receipts as I keep every receipt for fuel and they don't have registration numbers on?
I understand exactly what you mean about Sage. It certainly isn't idiot proof. Why do you think I've signed up today?
For now though, I think we are stuck with Sage until we have time to review our options especially know that we have Tradebox linked.
-- Edited by Rhothgar on Sunday 21st of July 2013 05:39:42 PM
Bank payment from business credit card account to 2335 for £28.44 - T9
Cash payment to postage (T0) and parking (usually T1, check receipt)
Cash receipt from 2335 for £21.54 - T9
I have just got around to looking at this again.
I have posted BP from 1200 to 2335. When I do a P&L, there is no loss showing. Why is this? Is it because 2335 is a Long Term Liability?
Cash payment for postage and parking is presumably going from 1231 Director's Private Money Introduced to 6901 Postage and 7400 Travelling respectively?
Only looking at 1231, it shows -£6.90. What I am now not clear on, is if the business has paid £28.44 for fuel (to 2335) and Director has paid £6.90, then only £21.54 was owed to the business.
I think I am confusing it too much with having this 1231 code in as well as 2335.
I have then coded £6.90 from 2335 to 1231 to cancel out this £6.90. Is this right?
-- Edited by Rhothgar on Sunday 21st of July 2013 06:27:37 PM
I have somehow ended up deleting the Default Chart of Accounts in the Practive Company. I have recovered that and now amended it to match the COA for the business.
Interestingly, 1231 Directors Private Money Introduced we have as a floating nominal. However, when I just tried to post a BP from 1200 to 1231, it does not appear. Am I therefore right in supposing that this would be done by journalling between or is this bad practice?
We always post postage as T2 as it is my understanding that it is exempt. Of course, Special Next Day Delivery are now T1 on a Friday if using Saturday Guarantee service!
I am pretty sure that particular car park is T1 as it is a council car park - though I will be mindful to double check that.
Interesting about the VAT though. Surely is this only if it is for a company car? It seems that you are suggesting it can be reclaimed on the MAP.
If so, this is great news for us. The next question would be, if we can claim VAT back on director's MAP then how far can we go back in time? That would be a welcome pot of gold back into the business.
The floating nominal is correct. As a bank account, should it be overdrawn, it will go to creditors, instead of bank and cash.
You cannot post bank payments to another bank account, you have to do a bank transfer... the system would have told you this though, not let you post it?
I use T2 for non registered business, and T0 for O% and Exempt. T9 is then outside the scope of VAT. At £1 postage, I'd have expected that to be normal postage, but yes, T1 if that's the case.
Company cars usually see the full running costs go through the company. Mileage is usually for non company cars. (What is MAP?)
I imagine you can go back to the day the business went VAT registered? Note that the rates changed, so you would have to do a proper analysis on a monthly basis to identify the rate changes.
Here is the VAT guidance:
Input tax is calculated by multiplying the fuel element of the mileage allowance by the VAT fraction (VAT rate divided by 100 + VAT rate). The allowance paid to employees must be based on mileage actually done. Business records must be kept to back this up. The business must retain records for each employee claiming a mileage allowance to show:
the mileage travelled;
whether the journey is both business and private;
the cylinder capacity of the vehicle;
the rate of mileage allowance; and
the amount of input tax claimed.
HMRC officers may check what rates employers have used to calculate claimable input tax on the fuel element of mileage allowances paid to their employees. Current rates as published by motoring associations such as AA or RAC are generally acceptable. HMRC will also accept HMRCs own advisory rates which are published twice a year and can be found at Company Cars - advisory fuel rates.
Some employers cap employees to a particular level of allowance. For example, the employer may decide that employees with cars with engines over 2000cc will receive only the rate paid for vehicles between 1400 and 2000cc. If this happens HMRC will only allow input tax recovery on the mileage rate that the employer has paid to the employee.
Company cars usually see the full running costs go through the company. Mileage is usually for non company cars. (What is MAP?)
The link you sent mentions comapny cars.
It is my understanding and perhaps (I hope) I am wrong on this that the VAT reclaim only relates to company cars and not employees' (read directors') cars used in the course of business where a MAP (Mileage Allowance Payment) is paid.
If you search Mileage Allowance Payment on HMRC, it will explain fully. Currently 40p (or 45p) per mile for 1st 10,000 miles I believe.
We keep mileage record books which shows the business mileage driven and also private mileage.
As it is, we have not paid ourselves back completely for the business miles driven but would I be right in saying that providing we post all business mileage and the correct MAP for each business year then it simply becomes a debt coded as a journal debit to 7400 (or such other nom code we choose to use).
The business owes us £1000's in MAP but so long as the debt is recorded, it is up to us to decide when to pay it back to ourselves as the business grows?
not going into all the ins and outs of this thread. (originally switched off at Sage).
Just on the VAT on mileage.
Where an individual reclaims mileage from the company provided that they supply the company with VAT receipts for petrol that more than cover the VAT to be claimed by the company (doesn't go anywhere near the payments to the individual) then the company can claim some VAT on mileage.
That reclaimed in not on the 45p/25p but rather on the approved mileage rate.
rather than going back over it all again here have a read through this thread :
The subject has been covered in other threads as well but that one's as good as any,
hope that helps,
kind regards,
Shaun.
__________________
Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
The VAT receipts for the fuel are only connected in the loosest possible sense.
A few VAT receipts will come to more than you could possibly hope to claim via this method so it's the one case where missing receipts are no biggy.
As you have noted it will not be a massive amount that can be reclaimed by the company and many do not even bother with it. It would however be remiss of me not to mention that it existed.
kind regards,
Shaun.
p.s. I don't hate Sage and would not attempt to convince long term users to change from it... I just don't want it in my practice.
For starters I don't like the Sage tax where we are charged more to use the same software dependant upon the number of clients that we have. And, as you appreciate software costs directly affect our bottom lines.
With QB Pro you can have 99 clients. I believe more than that with QB Premier. With VT you can have unlimited clients.
I also find Sages lack of flexibility frustrating in that it's been written seemingly to make it idiot proof but in doing so they make it more difficult for those of us who know what we want to achieve.
With Sage I feel as though we are little more than end users of the software rather than the software merely being a tool to improve our efficiency at what we do.
__________________
Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
Shouldnt' directors loans be current liabilities even where the go over more than one period?
The ability to repay the loan within a year would be a no never mind for the DLA which would be treated as an overdraft rather than a loan.
To make it non current I believe that you would need to have formal loan documentation in place. The reasoning behind that is that to treat as non current can completely mess up the important ratio's such as gearing and ROCE on which loan decisions would be partly based.
(sorry, talking in principles rather than nominal codes but sure everyone still understands me).
__________________
Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
It's a good point. We have it down as Long Term Liability in our Chart of Accounts. Theoretically, I think you are right which is why we introduced the 1231 Directors Private Money Introduced but that just seems to confuse things (see post above).
MAP - Mileage Allowance Payment.. LOL.. I've just only ever called it mileage, sorry!
The £28.44 wont show on the P&L because the fuel was not a P&L item. You correctly posted it to DLA (Directors Account). The mileage will be the P&L item.
Sorry, I was rushing yesterday, and mixed apples with pears after reading your comment- You posted the £28.44 to DLA, and then the £6.90 out of cash.. so only the £6.90 need to be a cash receipt from DLA. You can go into corrections and change the £21.54 to read £6.90. I actually create bank accounts for each director so I can plot what they have paid privately. I then do a journal to DLA once a month. This helps with picking up VAT as well.
Sage is weird in that it post Corporation Tax to long term as well, which is rarely is. I dont use Sage 50 to prepare the accounts so I never bother.. but you can play with the Chart of Accounts to make the report look anyway you wish.
MAP - Mileage Allowance Payment.. LOL.. I've just only ever called it mileage, sorry!
The £28.44 wont show on the P&L because the fuel was not a P&L item. You correctly posted it to DLA (Directors Account). The mileage will be the P&L item.
Sorry, I was rushing yesterday, and mixed apples with pears after reading your comment- You posted the £28.44 to DLA, and then the £6.90 out of cash.. so only the £6.90 need to be a cash receipt from DLA. You can go into corrections and change the £21.54 to read £6.90. I actually create bank accounts for each director so I can plot what they have paid privately. I then do a journal to DLA once a month. This helps with picking up VAT as well.
Sage is weird in that it post Corporation Tax to long term as well, which is rarely is. I dont use Sage 50 to prepare the accounts so I never bother.. but you can play with the Chart of Accounts to make the report look anyway you wish.
:)
Sorry. I always tend to use the official terms that HMRC use for the avoidance of doubt.
There are mileage allowance reliefs, payments, etc.,etc.
I think moving forward I will have separate DLA for each Director as it is a nightmare currently knowing who is owed what.
Sage is over-complicated and I sure both yourself and Shamus would agree with me.
I cracked it today - spoke with Sage.
This is how!
1) Posted a Bank Payment to DLA (2335) - strictly speaking this is not ideal as 2335 is for formal loan agreements that a director has entered into to lend money for the business.
2) Journal Credit from 2335 Journal Debit to 6901 for the postage
3) Ditto for parking from 2335 to 7400
4) Cash Receipt into 1230 from 2335 for the £21.54.
I think that is largely what you said. However I cannot see your post whilst I am responding.
Many thanks for both your support yesterday. In the end, I had looked at it for so long, I was seeing more than double (entry).
You don't know the director concerned. If we have that one VAT receipt for £28.44 for the whole year, we'd be lucky!
