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Redspottedhanky


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Help with VT+/ nominal code accounts please
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Hello,

I would appreciate it if anyone had any input on this please!

I started doing bookkeeping for a small Ltd co, VAT registered, in February, they had just got their accounts in at that time. The company is an events planning business, which typically books events 2 years into the future, on a seasonal basis. They take a 10% deposit on booking, then the rest of the money is due in 2 stages in the year of the event. The figures are fairly sizeable, as the customer books the venue through them (not through their choice, the venue refuses to take it directly). They also have some other income through bookings of other businesses at the events, and through bar sales at the event. They are cash accounting based.

They were at that point working with their own copy of Sage, as a family member was previously helping out, but no longer could, and were in a muddle with it. They were just trying to muddle through the basics themselves, but everything was just being coded as a misc. expense! I am NOT Sage experienced, and completely didn't get on with it. There was no information there about customers, payment due dates, and it was hard to extract information from (I know not all the fault of Sage, but some of it is unwieldy).

I have recently invested in VT+, and decided that it would be a good exercise for me to transfer the data through partway through the year (on my own time), and work through there instead. However, the VAT totals due are differing wildly between Sage and VT, meaning that the total is more due to HMRC.

Where I think the issue lays is in the customers. I have set them all up a customer account, and transferred any deposits received last year from the deferred deposits that were in the profit and loss through a journal entry. This does not seem to have occurred any VAT, as it will have been paid on receipt. However, my sales and deferred deposits for the year are massively up compared to last years P&L- It seems, as I am issuing an account, it is taking the whole sales amount as a sales figure, even though the majority is not due for another year. I didn't think this would be the case on cash accounting basis.

Any suggestions? Should I be setting up an extra 'next year' sales account, for those received in advance? There isn't one on last years P&L. I could only invoice the customers for the amounts as they are due, this is probably the correct way, but is there any way to track what each customer owes altogether by doing that?

I would really appreciate any advice or ideas anyone has- I'm relatively new to all of this, and it's times like this I really feel going straight into it by myself.

Thanks,

Claire

 

 



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Claire
Cheshire


Master Book-keeper

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Hi Claire
Half skim read this and not hot time to look at it just now, but can you just confirm are they cash accounting or vat cash accounting? I do hope not the former given they take two year deposits and therefore need the accounts to be on the accruals basis, but thought it best to get that clarification out there for anyone looking to answer this one.

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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
Redspottedhanky


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Hi Jo,

As far as I am aware- although I will be asking them to send me over last years accounts to make sure!- that it is VAT cash accounting. Although the turnover is high in this company, profit is not, and they would not easily manage to pay VAT on accruals.

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Claire
Redspottedhanky


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Okay, so I have figured out the VAT thing, and now I need to look again at the way I do things. So many learning processes!

Basically, I was setting up an invoice for the full amount of the amount due, and crediting each payment received from the single invoice. This meant I could see at a glance each customers' balance outstanding, which is very handy for recording data. As I stated, I was doing a journal entry transferring any money paid in previous years from the deferred deposits opening balances. Any amounts that customers paid for future weddings were paid to the VAT for the period, and the net amount to a deferred deposit account for next year.

The problem is that as customers are paying off the balance of the invoice, VT doesn't know that the deposit transferred across already has had VAT paid on it, and is reporting the full amount of VAT due for the full invoice as then payable.

So: invoice of £1000, plus £200 VAT
£100+£20 already paid (and VAT reported & paid), journal entry of £120 from deferred deposits to customer account
Customer pays £900 + VAT of £180
VT thinks that VAT is still due on the full invoice, and transfers £200, not £180, to the net VAT due account.

Now I've figured out, I need to figure out how to change it! I guess I will have to split the invoice into the 3 amounts due, only invoice as it is due, and lose the ease of seeing what each customer owes.

If there are any opinions on alternatives/ the best way to do this, I'm all ears!

Thank you for answering me earlier Jo, sorry I forgot to say that!

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Claire
Cheshire


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Hi Claire
Sorry Ive got major sinusitis today (and have had for a week) and so cannot get my head into thinking mode. But I had a kitchen client who had similar issues and I asked this as a Q when I (almost) first started out on this site and got a superb bit of help, plus I know I did a lengthy reply to someone else on the very subject maybe a year or two back. So if you do a bit of digging you should be able to find both posts. You might be better searching via google, with one or two key terms and my first name. Try with 'Michelle' and/or 'Vince' as it was one or the other who helped me. Also maybe 'sage'. Yes whilst I know I use sage, software is software and you need a work-around. Have to say it wasnt VAT cash accounting so some extra tweaks might be needed for that.

Failing that if no-one else has helped, when my head is clear again I will try to come back to this (but for now Im not letting myself loose on anything even slightly more complex than easy peasy ultra simple as I seem to be danger to the work piles!). I need a dark room where I can sleep!

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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
Leger


Master Book-keeper

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Hi Claire

Just a thought but go into set up (top bar) and click on VAT. Is the cash accounting button ticked?  



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John 

 

 

 Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.
Redspottedhanky


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Sorry I disappeared, thank you for the help! I also was suffering last week, trying to figure that out with a fever and throat infection was not fun. As I had a strict deadline, I have ended up just inputting the information that I needed there and then in as a new company, so I could send the information over for that VAT quarter. I know it was a cop out, which REALLY bugged me, but needs must! So I will be having a look again this/ next week, and seeing if I can figure it out. If the VAT needs changing, it can be done as an adjustment- they need to chase lots of receipts, so there needs to be work done anyway. The cash accounting button is definitely ticked, by the way, but some of the amounts coming up for VAT were really odd- who knows what I have done! They joy of new software to play with! On the plus side, I found VT very good to use, fingers crossed they change their mind on MTD. Glad of the purchase. Thanks again for the help and advice, I might be back again yet when I'm looking at it again!

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Claire
Leger


Master Book-keeper

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Hi Claire

Sorry to hear about your fever.  Will have a play myself on that VAT cash accounting button (which I've never used) because the idea should be that the VAT is allocated against the receipt rather than tax point of the invoice.



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John 

 

 

 Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.
Redspottedhanky


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Posts: 27
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Oh, it will definitely be my user error, doing something wrong! I just get frustrated not knowing how to do it right. The software understood that we needed to pay a certain amount of VAT on the invoice, it's just how to make it work that the payments made last year had already included VAT, and how to allocate money from the deposit account towards the invoice. In future years this probably wouldn't be an issue because the software can 'see' the previous transaction. It would probably be wise just to raise the invoices as a % is due, but some people like to pay a smaller amount monthly and it makes it more difficult to track outstanding payments. Anyway, it's good to play with these and get to grips! Thanks for the advice.

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Claire
Cheshire


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Im very confused by what you mean the payment made last year - why are these impacting this year? Due to a change in software? If so, surely whatever was paid vat last year that you still have on your system shouldve been part coded 'no vat' (paid element) and 'vat' for the unpaid? Sp you mightve had several lines of o/bal entries for each invoice depending on what the paid/unpaid position was?

Would need to interrogate the data.

Maybe worth running a dummy VT file with a small number of entries, key one thing and run a VAT return/TB to see where and how its impacting.

__________________

 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
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