VAT FLat Rate Income Adjustment?!!

LynWest

Hi Everyone, hope you are all ready for Christmas!

I have a client who has done their own accounts on Quickbooks she has given me the P&L asccount and BS and wants me to produce paper accounts for submission to Companies House, she left if to the last minute before getting me and Companies house they will give her another 28 days to get them submitted!!

She has tried to do them herself and the bs she has produced doesn't resemble the P&L & BS she has provided and the reason is she has left out a VAT RATE INCOME ADJUSTMENT of £-5767.61 from the current Asset section and VAT FLAT RATE ADJUSTMENT of £-4286.44 from the Current Liabilities section. Shouldn't the VAT RATE ADjustment have already been allocated against the Sales Control Account and Purchase control account and not be shown in the balance sheet? or have i haddled my brain completely with too many mince pies and xmas parties!!?
If they should be shown on the balance sheet do i show them as this on the balance sheet for submission to Companies House and HMRC.

My client has already paid the corporation tax figure that she has calculated over to HMRC but not submitted a return or Accounts to Companies House.

Sorry is i am being dumb never had a flat rate client on Qbooks and not sure how it is handled!

Wishing everyone a very Merry Christmas and a Happy, Healthy and Prosperous New Year

Thanks

Monsoon

I don't know how QB handles flat rate VAT (or if it does at all).

However, the difference between the VAT due to HMRC and the VAT paid over on flat rate should be credited to the P&L as additional income, which is taxable.

Any VAT due at the end of the year will be a creditor on the balance sheet.

If you can journal it to do that, then that's fine.

Does that help?

LynWest

Doh! Just realised that you are not adjusting the purchase control account as under flat rate they cannot claim back any VAT. Any advice re the items in the balance sheet though would be much appreciated. The more i look at these accounts the more confused i am getting. She said it would be a simple case of writing up her finished accounts into a format acceptable for companies house and helping her complete the online HMRC submission! Feeling like a right sucker now at least i am on an hourly rate for this one! Time for a cuppa and mince pie me thinks!

Monsoon

To be honest, if it was me, I'd want to take her TB from QB and do a proper job.

"She said it would be a simple case of writing up her finished accounts into a format acceptable for companies house and helping her complete the online HMRC submission! " I've heard that one before. I only fell for it the first time You live and learn!

If a prospective client says it's simple, take with a large pinch of salt. Sometimes they are right. With a limited company, odds are they are wrong.

I'm a little confused too now (too many pringles?!). Which balance sheet entries are you needing help with?

all you should have re VAT are a CR of VAT due, reduced by a DR (money saved via flat rate) with the opposite entry being a CR to the P&L.

In QB I run a dummy account to balance out flat rate VAT entries (I'm using a really old version which is why I can't offer specific advice). EG QB runs a VAT return and says VAT due £5000. I calculate flat rate as £4000.

QB wants to reconcile the £5k and show it as paid, so I do that, and show it as paid from the dummy account. Then I clear the dummy account with £4k to the real bank and £1k to flat rate profit.

LynWest

Thanks Monsoon, sorry i posted again whilst you were posting me we crossed over. I'll try that! She is a new client and her old accountant told her to journal that way just cannot see why she would have it in the assets and the liabilities section as she also has the VAT control in the liabilites section for the last VAT return. To be honest she is a nightmare nightmare of a client she has 3 companies, 2 have since ceased trading. the first one i just checked her online submission with the records she had. nice and easy and the other two accounts were going to be the same but the balance sheet doesn't balance on the one and i have this VAT issue on the other. Both are over due as she didn't do anything about it until Companies House got stroppy! Hence she contacted me. She now emails me a query and if i don't reply within a couple of hours she emails a stroppy email or threatens to get another accountant! I was waiting for her QB file for her one co this morning so i started work on the one i have the vat query on whilst waiting, i go back ask her a few things and she comes back 10 mins after sending me the file for the other company i had been waiting for and tells me to stop wasting time on the VAT query as the file she has just emailed is more urgent! I was only trying use time as efficently as possible! Thankfully two have stopped trading so once tehy are out of the way the better! Sorry to rant just needed to clear my chest! Have a very happy Christmas Monsoon and thank you for all your support on here.

Monsoon

Wow. I'd get this one filed and then disengage. There are plenty of lovely, lovely potential clients out there - you do not need this one. Or, you need to tell her in no uncertain terms that you won't be spoken to like that. I'm a coward, though, so I'd just sack her

Can't help on the balance sheet queries I'm afraid, my head is addled and I can't work it out - good luck!

And thanks, have a lovely xmas and new year :-)

LynWest

Thanks for the help Monsoon that is much appreciated. I have just finished sorting out her other company now so only the VAT query to get my head around in the morning, if i don't decide that its the start of my Christmas holidays! he he. Pringles sorry private joke, once you pop you just can't stop and thats me i only ever buy them at Christmas time and once i start eating them i live off them!!

Thanks again for your help, have a lovely Christmas and new year

LynWest

Hi just reread your post and i see you were talking about you eating pringles when i read it i thought i must have mentioned by xmas pringle addiction! Sorry brain has turned to mush!!