When a company has booked gross sales for say six months and is then VAT registered (and thereafter obviously books net sales), what is the conventional approach to showing sales? Do you go ahead and include the gross sales in 'Sales' or do you split the gross sales into 'sales' and 'unrecoverable VAT'. The second approach would be preferable for management accounts and comparison purposes......but what about the statutory reports?? Is there a convention if not a requirement??
There isn't any unrecoverable vat on the sales as no vat would have been charged, the question would make more sense for purchases. Anyway the total sales pre vat registration and the net sales (would expect these to be no different from the pre-vat reg sales) would go on the accounts.
Yes of course it makes more sense......'Unrecoverable' was the clue!
I expect that I will make a separate record of the net value of the pre-reg sales (had VAT been included) for comparison purposes if not for any other reason.
The net value of the pre reg sales is the value that they are at now. If you are going to take 5/6 of the pre reg sales then this will make your comparison figures incorrect.
No it's not like that.....I should have explained the type of business......let's just say that it is a retail business with fixed prices so the sales prices are the same whether or not VAT registered. So......in future years comparison would be incorrect if the (calculated) VAT content of the pre-reg sales were not taken into account.
I suppose the type of business made a difference to my question on how others dealt with it.
The purchases will also be less now as you won't include the input vat. I would be more inclined to look at the gross and net profit margins percentage as a comparison.
