Hello, I need an advice as I am an accountant trainee and I do not have much experience. I just have come across with two purchase invoices with same date and same invoice number, invoice amount is slightly different, one invoice is for advance payment and another is for purchase materials, my client is absolutely sure that both invoices regard different purchases and they were paid separately by cash, there are cash withdrawals which could confirm that, but there are no other evidence, he is not able to obtain invoice number correction as the supplier does not exist anymore. He had been paying on advance very often but only that time he got invoice with payment on advance description. I would very much appreciate if someone could help me in that matter and could advice whether I should account both invoices separately or not.
Hi Malgorzata
So hows about an intro before we start. We always ask newbies!
Usual stuff - what prof body do you belong to, do you work in a practice/ firm or for a limited company accounts department (what support do you have/what quals do your superiors/practice have?), what qualifications, how long in role, where up to in your studies-what exams passed/with what body/in midst of doing, where based, what you did before this role? That sort of thing. Helps get to know you but also how best to pitch answers.
What works are involved? How old is the invoice that the business is no longer active? How did the supplier business fold? (Liquidation or such?) What was the 'advance' invoice for? Where is the 'balance' invoice? Have you seen the contract supporting the invoices?
__________________
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
Hello Cheshire,
Thank you very much for your quick answer, I am sorry I should introduce myself first, I am AAT Qualified Bookkeeper with AAT level 4 accounting diploma, I have just started ATT tax advising course and I have been working as a tax advising trainee on part time basis for a few months only an accounting practice, and before I had been working as a cleaner.
Our client is a company limited, they buy windows in Poland and sell in the UK. The invoice is one year old and there is "advance payment" description only, quantity 1, price £ 14 999.00, the other invoice with same number and date shows "window sash" description, quantity 15, total price £ 15 000.00. He is absolutely sure, that both invoices regard different purchases and were paid separately by cash, there is evidence of cash withdrawals from bank statement which could confirm that, but no other evidence, there is no balancing invoice as well and I have not seen any contracts supporting invoices, the client has not got any. I prepare his annual accounts and I have been provided with bunch of purchase invoices for windows purchases, only one (mentioned before) is for advance payment, but our client had been made payments on advance regularly and bank statement confirms that.
I will be very grateful if you could help me in that matter.
Best Regards
Just trying to get this clear what you are saying, your client is claiming that the advance payment and the actual Invoice are for 2 different purchases even though they have the same Invoice number and the same date? If so what does the advance payment relate to?
If the windows are made in Poland is there no evidence of them being delivered? If your client withdrew £30K in cash how did he pay this to the supplier in Poland?
If the windows are being sold on a made to order basis is there no proof of sales for the different purchases and delivery addresses, I think you might struggle trying to convince HMRC at the moment without further evidence to prove that there was indeed 2 separate purchases.
__________________
Doug
These are only my opinions of how I see things and therefore should not be taken as advice
Ha Doug
I typed a long response but was holding back on the basis of getting that ither Q answered. But here it is in its entirety. We are on the same page.
Most business owners would swear black was blue if it meant we would put something through the books that would save them tax. This one I have to say sounds as dodgy as hell. Taking big chunks of cash out from his bank indicates something to hide and is not evidence of anything.
What exactly has happened to the Polish supplying company? On what basis has that business been closed? Has the business been liquidated by an insolvency firm?
Warning signs/Qs
- No contract backing up the supply
- No balancing payments
- how has he paid cash to someone based in Poland?
- has he an email chain confirming what has been paid to whom/when/for what (ie showing the contract even if not couched in legal terms)
- What do his stock figures and sales tell you - sales of said windows v purchases?
- Where is the import documentation backing up such a claim?
- what would you (he) do in the event of an HMRC inspection to prove that said invoices are actually for the separate supply and genuining supplied to his business?
Without ANYTHING further backing this up I would be dumping the cash withdrawal to this guys DLA and suggesting he get some concrete proof of the deal before you move it out.
Tell the client to stop transacting in cash!
Your firm should consider reporting this under MLR - you should report this to your firms MLO (documented, to cover your own back).
__________________
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
Afternoon Joanne, similar views but put so much better by you
Malgorzata, the other thing I meant to ask was if you are a trainee should you not be asking your supervisor these questions so they can show you how best to proceed?
__________________
Doug
These are only my opinions of how I see things and therefore should not be taken as advice
Afternoon Joanne, similar views but put so much better by you I dont think so! You are way more succinct, I waffle a lot!
Malgorzata, the other thing I meant to ask was if you are a trainee should you not be asking your supervisor these questions so they can show you how best to proceed? exactement, as the French say.
__________________
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
Dear Cheshire and Artois, thank you so much for your answers, I do appreciate your help very much, I am so glad I have found your forum. I work for an accounting practise where my boss is ACCA qualified, but unfortunately he is on holiday at the moment and there is only other AAT Qualified Bookkeeper, who is not sure what to do as well. Yes my client is claiming that the advance payment and the actual Invoice are for 2 different purchases even though they have the same Invoice number and the same date, and the advance payment is a payment on account of future purchases, that payment was balancing with other purchases and he was given invoices reduced by advanced payment already made, but there is no any word of that. I try to believe what my client says, but as I can see from your posts, there is no evidence to confirm that. I should account only one purchase invoice, unless he will provide some evidence to confirm that two purchases has been made. thank you so much for your help, I really couldn't sleep because of that. May I write to you if I'll have more qestions?
Sending you best wishes
Hi Malgorzata
If you view the forum on a PC you will see that I am Joanne and Artois is Doug.
Feel free to post as much as you like. The more the merrier. Not just asking Qs but helping others - you will learn so much from helping others on here as it makes you question everything more deeply!
I would though recommend you wait for your boss to return before finalising the accounts. I would suggest that any interventions needed with this client might be better coming from him given the impact/quantum (and it being his practice and all that). Perhaps do a list of things you would like to talk to him about along with a note as to why.
__________________
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
Dear Joanne and Doug, thank you very much again. Joanne it is what I am going to do, thank you so much. It's been pleasure to talk to you. I hope I'll be able to help others too :).
Wishing you all the best
xxx
