Date recognition without invoice

Adev

Hi,

I've taken on my first client (a sole-trade carpenter) this week who wants a profit & loss done for the year in order to do a self assessment.

He is not VAT registered.

My questions is this:

I've input all of the year's sales/purchase invoice and also invoices 1 month eitherside of the financial year. The bank statement shows receipts and purchases to suppliers and customers which exceed the total values of the purchase and sales ledger control accounts.

Can I recognise these receipts and payments as purchases & sales on the dates of the transaction, or will i need to get store receipts/invoices of the date when the credit sale/purchase took place? (ie. use the tax point as opposed to the transaction date)

If invoices/proof of date on the credit sale/purchase IS needed, and I can't obtain the proof, can someone confirm if a post entry to drawings/capital will suffice instead?

If you need more info to answer, please let me know.

Thanks in advance

Andy

MarieNoelle

Hi
Here is what I would do. Others might advise otherwise.

First I would look at last year's account and last invoice/purchase invoice recorded.
On a accrual basis, in principle, some invoices raised last year will have been paid in this year and showing on the bank statement. They have to be excluded from this year's account.
Do you have a list of debtors/creditors brought forward from the previous accounts?

Purchases you can not identify, or where you do not have supporting evidence I would enter as drawings unless it is clear it is a business expense; for example, it's a recurring DD to BT and the sole trader is claiming a business proportion. I would enter the date on the bank statement.
For receipts, however, I would ask for more information; if it's not income (i.e no supporting invoice), could it be a refund from a supplier? A transfer from a savings account? Could it be cash/cheque from a customer but invoice is lost/omitted? HMRC is more likely to query unidentified receipts and assume these as extra income.

Does the sole trader have opened a bank account for his business only?

Adev

I have b/d figures from last year's balance sheet, but no purchase/sales ledger account b/d figures.

I have some invoices from the end of the previous year which i dont know if they've been incorporated in to the previous year's accounts or not.

Yes - he has a business account and makes very few cash transactions.

Thanks