Hi, 

I am working on accounts that should have been cash accounting, instead it was set to standard vat for 2016 - 2017.  Having done year end, is it now possible to change it to cash accounting?  I have tried to change it but a warning box flashes saying. cannot change your vat scheme whilst there are vat reconciled items.

I would be grateful if someone could take me through the steps to be able to do this, I am newbie so accounting terminology is lost on me sometimes (sorry).  

Is this the same client as in http://forum.bookkeepers.network/t63670881/year-end/?

is this also the same as the client as your other post of this evening?

What exactly are the Accountants planning on doing, plus what support are they giving you?

when was the year end? What is the vat quarte date?

I am moving coverage of both posts onto this one.. from http://forum.bookkeepers.network/p/reply/?topicID=63757326&commentID=63757492&subAction=quote

flewis wrote:
Hi,

Yes it is.

I am not sure what the accountants are planning on doing?

I am presuming they are going to go through last years bank statements, invoices etc and get a clear picture of what went on and how to go forward.

For now I am wanting to input data for 2017 /2018 so I can do the VAT return for Q1. I haven't inputted any data for this year yet as I was unsure if I could edit the bank balance to reflect the bank balance on the bank statement after data has been entered, so have held off but time is ticking and I really want to be able to move forward with this. I used to enjoy book keeping up until now.

I know there is a whole can of worms here, but I am leaving it to the accountants to work it out and I was hoping I could amend the balances to I could start this year with correct info. Is there anyway of doing this by journals etc??

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This is going to sound a bit harsh!

i covered off the situation re the incorrect balances on the back of a lengthy response to your first post.

So in almost a whole month there has been no movement on this as you say (@22.28) in that no information has been given to the Accountant yet!! How on earth can the Accountants sort this complete and utter mess and frankly potential fraud against the VAT man out when the information has not yet been passed forward. You cannot just 'leave the Accountants' to sort out the prior year end when they do not even know of the errors, omissions and complete c**k up this client has been making.

Are you just a little out of your depth and isnt there a time in your career when you have to say 'no' to a client?

Have you got really good PII cover in place yet?

Plus MLR?

Please confirm the above

Assuming you are still going ahead....then a few Qs offf the top of my head:-
1) I assume the 'vat reconciled' error message you are getting is ' VAT unreconciled'?
2) What sage type and version? If you want a technical response then this is crucial.
3) Who will be doing the VAT adjustments for the c**k up from last year's being on the wrong VAT basis? Who will be informing and reporting this to HMRC? The year end spans a quarter so that will be interesting! Edit sorry misread that, saw April and thought that was the vat quarter end, whereas it's clear its June.
4) How long have they actually been accounting for stuff on the incorrect VAT scheme?
5) When you say that you have rolled over the year end - who suggested that without getting the Accountants view? (I think I mentioned this in your first post, I may be wrong!) What reports did you get prior to running the year end? Has sage been archived? Are you able to get full reports out of it now (some sage versions prevent that after year end is run - older versions!)
6) Do they issue cheques for payment of suppliers and do they receive cheques from their customers? If so then the Bank balances cannot be used as your 'start' balance.
7) where is everthing up to regarding the tidy up of the debtors/creditors?
8) Are you saying that the April VAT return has not yet been completed?
9) Can you access full DETAILED VAt reports for all prior quarters


Edited to add Q9

-- Edited by Cheshire on Tuesday 18th of July 2017 11:04:24 PM

Thanks Shaun

Yes send that back up as long as NOTHING else has been keyed after it was done (but subject to the below #) Ive assumed they can access sage - worth putting a call out first and telling them the version as well. Failing that you will need to drag some reports from the system before you do anything else.

In fact I would be doing a restore to match the same back up as you send them, as you need to sort the VAT and you cannot do that whilst there are unreconciled items. So do a restore then run a DUMMY vat return from the year end to date, just to see if it is picking up any stray bits. Hopefully it will not as you have just done the year end. Do NOT save it, its just to see if anything is lurking.

Then follow this carefully https://my.sage.co.uk/public/help/askarticle.aspx?articleid=26131

Bank adjustment #

Strictly speaking if you take payments from customers via debit/credit card and /or pay suppliers via debit /credit card then the VAT is due under the Cash Accounting Scheme on the day that the card payment is actually made, rather than the day or three later when the receipt hits the Bank account (in/out).  This has the force of law under the scheme.  So strictly speaking you should not use the Bank balance from the Bank statement if you do either of the above, in fact you should make any necessary adjustments to both the balance and the VAT before you key any Bank adjusting entries.

Set up a new Bank account in the usual way, ensuring the new account is marked to allow reconciliations. Use one digit up on the nominal code list. This will then be picked up automatically in the right places in the chart of accounts.  Then mark the old account 'Do not use'. 

Assuming there were no card payments in or out, then take the balance on the Bank statement and move it by way of Bank transfer from the old account to the new, ensuring that the narrative on the entry explains what you are doing. (Or transfer the other way if the account is overdrawn).   If there are card entries as detailed above you will have to play around with the figures (and will then need to restore, re run your year end and re back up and send THIS file to the Accountants) for you do this transfer.

By setting up a new account, rather than just moving the balance to suspense on the existing bank, will ensure you can do a Bank rec from the very start.

I would suggest a dummy run,complete with dummy VAT return and Bank rec, with some keying post both events to test that it is all looking as it should be because if its not looking right you can just unravel it.   Keep the Accountant informed even though it is a post year end event, given the pre year end mess.