Accounting opinion needed with dealing with FRS VAT profits in the accounts

[zedAccounts]

I don't know about Sage, but the £1000 of sales is essentially £1022.50 worth of turnover, as FRS VAT needs to be accounted for as turnover. So transaction 1 is receiving the £1175 (+bank, +sales), and the tax transaction is £152.75 (-bank, +creditors).

Turnover is sales+VAT less the VAT you have to pay under FRS.

You may want to try the zedAccounts software as it is FRS VAT friendly.

ZED.

[krytonsheep]

Just follow the Sage Article Number 11741 on how to do Flat Rate VAT for Instant Accounts. (from http://support.sage.co.uk)

I'm using v14. It's not too bad (two journal entries and a bit of fiddling with the VAT form), but I'll probably upgrade soon if they've added native support for it.

[rmmc]

Every thing everyone is saying is still more or less pointing to the same thing ....... i.e. apportionment of FRS profits into the year which it relates instead of when VAT is to be reported....

css_jay99

It is based on accounting standard and rules "accrual basis". As sales happened in that year, so you made a "gain" on FRS so if the amount is material than you need to do the adjustment. If it is small amount you can ignore and do not need do the adjustment. In this case you adjust when you file the vat return.

[css_jay99]

Just a bit confused with your post.

when you raise the invoice sales of £1000 will be posted to sales / income and £175 as a vat owing to HMRC.

So at year end your situation would be

Sales £1,000 (Credit balance)
Vat £175.00 (Credit balance)
Bank / debtors £1,175 (debit balance)

So you just need to adjust for the FRS difference.

Debit Vat (vat liability account) £22.50
Credit Sales £22.50

You can ask HMRC to move your vat quarter to coincide with your accounting year end.

which is essentially what I am doing in my example ....


I created a nominal code 4906 as Other sales/income to keep track of any extra income comming in via FRS
N/C 2200 is sales tax control Account
N/C 2202 is vat Liability

Credit 4906 others sales with £22.5
Debit 2200 sales control with £22.5

Debit 2200 sales control with £152.75
Credit 2202 VAT liability with £152.75


Every thing everyone is saying is still more or less pointing to the same thing ....... i.e. apportionment of FRS profits into the year which it relates instead of when VAT is to be reported....

Might give the other softwares a try

css_jay99

[rmmc]

Just a bit confused with your post.

when you raise the invoice sales of £1000 will be posted to sales / income and £175 as a vat owing to HMRC.

So at year end your situation would be

Sales £1,000 (Credit balance)
Vat £175.00 (Credit balance)
Bank / debtors £1,175 (debit balance)

So you just need to adjust for the FRS difference.

Debit Vat (vat liability account) £22.50
Credit Sales £22.50

You can ask HMRC to move your vat quarter to coincide with your accounting year end.

[Clare@InTouch]

The newer 2011 version of Sage will deal with Flat Rate calculations.

[philip@wellwoodhoyle]

Or scrap Sage and get a decent system that does the flat rate automatically, i.e. Kashflow or Freeagentcentral!

[Sockpuppet]

Hi

I need an accounting opinion on dealing with VAT period straddling company Accounting period.

I guess this is a question for accountants amongst us or people who do their own accounts!

My Company accounting period is Jan - Dec
I have a VAT return period that straddles my Accounting period i.e. a VAT period Dec - Feb.
I am also on the Flat rate scheme


Here is an example of what I currently do... using figures as an example ...
Gross Sales/Invoice for December = £1175 (includes £175 VAT)
Under FRS, VAT to HMRC (due next February) will be £152.75 (i.e. 13%*1175)
Profit/Extra income on FRS will be £22.5 (i.e. 175 - 152.75)

So ...
1) Move £1000 to P&L account as sales
2) Move £22.5 to P&L account as Extra Income
3) Move £152.75 to Balance Sheet as VAT Liability (creditor .. even though not due or realised)


The journal apportionment of steps 2&3 is a complete pain in Sage instant accounts since it can’t handle FRS by default

so My questions are
a) Does everyone do it this way or
b) Leave out steps 2&3 from the current year and deal with it in the next year's account when the VAT is due... if so please explain


Cheers


css_jay99

Do all the steps at the same time otherwise you won't balance. I.e. you'll have cash in the bank you can't explain in the accounts.

[Vallah]

Just journal the difference ie "profit" element to your sales code. Easy.

ie Dr Sage code (2201?)
Cr 4000

[css_jay99]

Hi

I need an accounting opinion on dealing with VAT period straddling company Accounting period.

I guess this is a question for accountants amongst us or people who do their own accounts!

My Company accounting period is Jan - Dec
I have a VAT return period that straddles my Accounting period i.e. a VAT period Dec - Feb.
I am also on the Flat rate scheme


Here is an example of what I currently do... using figures as an example ...
Gross Sales/Invoice for December = £1175 (includes £175 VAT)
Under FRS, VAT to HMRC (due next February) will be £152.75 (i.e. 13%*1175)
Profit/Extra income on FRS will be £22.5 (i.e. 175 - 152.75)

So ...
1) Move £1000 to P&L account as sales
2) Move £22.5 to P&L account as Extra Income
3) Move £152.75 to Balance Sheet as VAT Liability (creditor .. even though not due or realised)


The journal apportionment of steps 2&3 is a complete pain in Sage instant accounts since it can’t handle FRS by default

so My questions are
a) Does everyone do it this way or
b) Leave out steps 2&3 from the current year and deal with it in the next year's account when the VAT is due... if so please explain


Cheers


css_jay99