There's nothing wrong with hating Sage - though in my case it's more the company than the software. ;) However, in this case his dislike of it is coupled with a lack of understanding of how it works.
All of those journals should have been posted as T9 so that Sage didn't consider them for the VAT.
The bad news is that you can't amend journals.
The worse news is trying to fix it by reversing them, and then reposting them as T9, won't work - it'll only make matters worse.
The reason is that, when it comes to journals, if there are any that have a tax code that puts them in scope of the VAT return, Sage adds ALL credits to the box 6 figure (ie it treats them as net outputs), and ALL debits to the box 7 figure (ie it treats them as net inputs).
So the best thing you can do is accept that, on this occasion, your inputs and outputs are incorrect and keep a note of it to remind yourself of the cause in case it's ever queried in a VAT inspection.
-- Edited by VinceH on Sunday 13th of October 2013 09:40:17 AM
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Vince M Hudd - Soft Rock Software
(I only came here looking for fellow apiarists...)
"The worse news is trying to fix it by reversing them, and then reposting them as T9, won't work - it'll only make matters worse.
The reason is that, when it comes to journals, if there are any that have a tax code that puts them in scope of the VAT return, Sage adds ALL credits to the box 6 figure (ie it treats them as net outputs), and ALL debits to the box 7 figure (ie it treats them as net inputs)."
Oops, meant to quote myself there and then add...
In other words, if you reverse them with the same tax code, you'll just have twice as many journal credits that are T0, which will be included in the outputs, and twice as many journal debits that are T0, which will be included in the inputs.
Sage doesn't look at the nominal codes for this, only whether a journal has a tax code that indicates it should be used on the VAT return - and it decides if it's an input or an output based on whether it's a debit or a credit.
-- Edited by VinceH on Sunday 13th of October 2013 11:39:30 AM
-- Edited by VinceH on Sunday 13th of October 2013 11:40:16 AM
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Vince M Hudd - Soft Rock Software
(I only came here looking for fellow apiarists...)
Jonular: Unfortunately, yes - if you mean the figures totted up from a year's worth of VAT returns compared with the figures in your P&L*. It's a case of the damage has now been done and, as such, it's unavoidable. As I said, the best thing you can do is make sure to make a note of it, nice and clear, so if it's ever queried by HMRC you can adequately explain the anomaly.
* The figures in your P&L, though, should be unaffected. It's just the inputs and outputs on the VAT returns that are incorrect.
-- Edited by VinceH on Sunday 13th of October 2013 11:45:31 AM
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Vince M Hudd - Soft Rock Software
(I only came here looking for fellow apiarists...)
Would simply adjusting the return manually, without creating the reverse journal, work, in that case? It appears that sage is putting nets on the return that shouldn't be there? Whilst the correct figures are hitting the nominals? If net sales are manually adjusted, decreased by £5020, doesn't that correct this issue for all intense purposes? Same for the net purchases?
I realise its not ideal to do manual adjustments, but so long as the correct figures are filed with HMRC and Sage is balanced, and there is printed copy of the sage return, with clear notes about whats been done.... will it make a difference?
-- Edited by FoxAccountancyServices on Sunday 13th of October 2013 12:07:06 PM
I've run my very first VAT return (but not reconciled) and I've got a couple of issues to sort out, but I'm not quite sure how.
The first one is a couple of journal entries. My accountant added some journal entries after the purchase of a vehicle which was bought with a loan. These were entered with a T0 , credit to nominal account 2300 and debit to 2210 for the same amount. Not sure why. This is increasing payments and sales. Can I just make a correction and change the VAT code to T9? I'm thinking that this will remove these entries from the VAT return but then are my end of year accounts going to be correct?
Also I have the same thing going on with a small CIS tax credit entered through the journal, again with T0.
I assume this is Sage based on those nominal codes?
Firstly CIS shouldnt go anywhere near a VAT return so that should be T9.
The first journal looks like you are crediting a loan and debiting the PAYE, this is odd to say the least. The only reason why is that this journal is correcting a previous error.
I think i would go back to your accountant and check, without seeing all the transactions i cant be sure but something here doesnt feel right.
Any problems let me know
Kind regards
Nick
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Nick
Nick Craggs FMAAT ACA AAT Distance Learning Manager
My accountant is about to retire and is very old school (does everything with spreadsheets and hates SAGE). I asked her advice on how to enter the vehicle purchase and she didn't really inspire me much confidence.
Sorry, yes I'm using SAGE.
For vat box 6 I've got:-
JC 2300 Vehicle loan tfr petty cash £5000
JC 4000 CIS £20.00
In vat box 7 Purchases on account I've got:-
PA 1230 Payment on account (vehicle purchase) £5000
The only thing it sounds like you can do, if you haven't already run the return, is...
Do the journal in reverse. Do the correct journal using T9. Then manually adjust the return, so that it takes out the balances in box 6 and 7 that relate to those entries.
"Would simply adjusting the return manually, without creating the reverse journal, work, in that case?"
Yes, if the return is submitted manually, rather from within Sage, then the figures can be adjusted before submitting - so that could be done. You'd still need to keep a good record, though, to explain what you've done in case you ever have an inspection, and the inspector asks "This return you've submitted doesn't match the figure shown in your accounts software. Why?"
I think there might be a way to fudge Sage into showing the correct figures, but it could be messy - and even messier if the VAT is done on a cash basis - and you'd still need to keep adequate records to show what you've done and why, in case you were ever inspected, so it's more effort than it's worth. TBH, I'd just make a note, as I originally said, and [let Sage] submit the figures as they are. Mountains and molehills spring to mind. HMRC bods aren't evil monsters with no understanding or willingness to accept how mistakes like these occur. Well, most of them aren't, anyway.
"It appears that sage is putting nets on the return that shouldn't be there?"
Not really. It's putting nets on the return that it has been TOLD to put there, by way of the tax codes! The fault lies with the person who used the wrong tax code in the first place - the accountant Jonular mentioned.
(Dear Accountants everywhere... well, with clients within a sensible distance of me, anyway: If you don't know to use Sage correctly, or simply don't like it, just pay me to visit your clients and deal with journals like that on your behalf. I don't mind taking your money... and I doubt if you'd mind adding a mark-up to it and sticking it on your bill to the clients, either! Hmm. That's, like, advertising, that is. I don't usually do that!)
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Vince M Hudd - Soft Rock Software
(I only came here looking for fellow apiarists...)
"Would simply adjusting the return manually, without creating the reverse journal, work, in that case?"
Yes, if the return is submitted manually, rather from within Sage, then the figures can be adjusted before submitting - so that could be done. You'd still need to keep a good record, though, to explain what you've done in case you ever have an inspection, and the inspector asks "This return you've submitted doesn't match the figure shown in your accounts software. Why?"
Yes I absolutely agree
I think there might be a way to fudge Sage into showing the correct figures, but it could be messy - and even messier if the VAT is done on a cash basis - and you'd still need to keep adequate records to show what you've done and why, in case you were ever inspected, so it's more effort than it's worth. TBH, I'd just make a note, as I originally said, and [let Sage] submit the figures as they are. Mountains and molehills spring to mind. HMRC bods aren't evil monsters with no understanding or willingness to accept how mistakes like these occur. Well, most of them aren't, anyway.
"It appears that sage is putting nets on the return that shouldn't be there?"
Not really. It's putting nets on the return that it has been TOLD to put there, by way of the tax codes! The fault lies with the person who used the wrong tax code in the first place - the accountant Jonular mentioned.
Sorry, my miswording.. totally agree its not the software, I just meant that the client doesn't want the figures there, because they shouldnt be there
Vince I wish everyone worked like you and I - noting down anything that has been done wrongly or oddly - lets face it with the best will in the world most people cannot recall what they did a few months ago, so it makes loads of sense. Ive just inherited a major mess and no notes for what is going on/why adjustments have been done AND it now appears that half the stuff has been going through the Director's personal account (found out from a flippant comment - but at least I found out! I guess!) - I reckon if I had a couple of weeks spare I could just go in and blitz it all and get it straight then fine, but Im restricted to only one day and week and the standard day to day stuff takes 1day+ never mind sorting messes out - so not much hope of that mess getting sorted any time soon!
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Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
I even have a standard journal form that I use to write all journals on before posting them. Most of them just share the detail that's put on Sage - but on those (albeit fairly rare) occasions where the details field on Sage just isn't big enough, an explanation can be written on the form.
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Vince M Hudd - Soft Rock Software
(I only came here looking for fellow apiarists...)
I have little spreadsheets for prepayments and accruals (although thats partly because Im not 100% comfortable with them all yet) - helps me! I like the Journal idea - hate when that little box will not allow you to key enough info. I use my own long used shortened version for words but not sure everyone would understand - so reckon thats a handy hint I will adopt - thanks Vince!
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Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
