Changeover from Cash Accounting to Standard Accounting

[Mensarius]

I need to convert a company from cash to standard vat, they are using sage instant account v11.01.

Sage are being unhelpful as we don't have support, and the help files are non-specific.

I have reconcilled the vat under the old cash scheme, but am now unsure as how to ensure we account for the unpaid invoices. Sage has reconcilled all the invoices in the change over. So if I run the vat again and include the reconcilled items - I get a cross over between the cash and std returns........help??????!!!!!!

[brucedenney]

You should have run your final VAT return.

Done your VAT transfer journal

Unticked the Cash Accounting option.

That is all you need to do providing, the VAT control accounts are correct.

If you run a vat return straight away (do not reconcile) the amounts on the return should be the same as in the control accounts.

At the next VAT return process normally, apart for a larger than usual VAT amount, the process should be as before, only now after doing your VAT journal, the balance on the VAT control accounts for the period will be zero, making it easier to check the vat has been properly processed.

[Mensarius]

I followed these steps, but when I unticked the cash accounting option, Sage reconcilled all the sales and purchase invoices.

How to I accurately account for the outstanding sales and purchase invoices from the previous quarters - for which the vat has not been paid under the cash accounting scheme?

[brucedenney]

Are you saying that when you run the vat return immediately after switching to cash accounting there is nothing on it?

[Mensarius]

yes, but I'm switching from cash to standard.

[brucedenney]

Opps sorry, I meant switching to standard..

I do not understand why you have nothing showing on the VAT return, that seems strange to me, however, the total liabilities are maintained in the control accounts.

When you next run the Vat return next you can add on the current period balance of the vat control accounts.

The position with the vat control accounts should be that they have a zero balance for the period (if you have not made any future dated posting then they should be zero balance).

[Mensarius]

Yes, its a mystery to me too - have had to use ost dr & cr lists as a control account as the control accounts were not reconcilled for 2004 & 2006. I'm out but not enough to worry about!

thanks for your help
Em

[brucedenney]

Sounds like things were less than tidy before you did the conversion.

The Sales tax control - less the purchase vat control less the amount of VAT paid should come to the current VAT liability ie the difference between cash accounting and standard.

This should equate to the VAT on the outstanding Debtors less the VAT on the outstanding Creditors.

As long as the difference is small err in favour of the HMRC and you should be all right.

[basskate]

Hi. I have tried to follow your instructions re switching. I've run VAT return, done VAT journal, then tried to click off the Cash Accounting box, but it won't let me. It says you cannot change VAT scheme while there are VAT unreconciled transactions. What am I doing wrong?

[brucedenney]

I suspect a future dated VATable transaction that has not been reconciled.

[basskate]

So is there a way to reconcile this - there are recurring entries in the system for January which have been processed - this might be the cause. What can I do now? Many thanks for your help - this is a brilliant forum!

[basskate]

Another thought - if I run a vat return at today's date then reconcile it - could I just add these figures to my next VAT return?

[brucedenney]

You could delete the transactions and then put them back afterwards manually