Can anyone help me with VAT return please?

svet_lana

Hello. I need to submit my client's overdue VAT return for 04/18 period. I've got the VAT return already calculated by previous accountant for that period, but it is not submitted yet. The accountant used accrual accounting and included two sales invoices dated 19/1/18 and 26/1/18 in the calculation. Is accrual accounting acceptable for VAT calculation? Can I use these January sales invoices to work out VAT for the period of 04/18? My client uses a flat rate scheme.

MarieNoelle

Hi @svet_lana
Please could you clarify, is the client on cash or accrual VAT scheme? This is different to accrual accounting.
If on cash VAT scheme you include all invoices paid in the quarter (so an invoice raised in January but not paid until February would fall in the VAT quarter ending April 18).
Can you ask the accountant directly?

svet_lana

Hi MarieNoelle
Thank you for your reply. It is not possible to ask that accountant directly. My client on flat rate scheme. As far as I could find out from bank statements, sales invoices and vat return documents provided by my client, his previous accountant included all invoices paid in the quarters January 18 and April 18 as under cash accounting scheme. However on VAT return document for these periods the accountant has written that accrual accounting was used. This made me confused. In the quarter October 17 the accountant included invoices which were all paid when they were received and they all fall in that period. The accountant also mentioned that accrual accounting was used. Could you please tell me if you see here any accrual accounting? Or maybe the accountant used it before and then changed for cash accounting. Can I continue to work out vat under cash accounting scheme or is it better to check with HMRC?

MarieNoelle

Hi @svet_lana
HMRC won't be able to help as there is no need to notify them which scheme (cash or accrual VAT) you are using. As long as the trader is eligible (turnover under 1.35M - I expect your client is under that threshold) he can use the cash VAT accounting.
From what you describe, the previous accountant seems to have used the cash VAT scheme, i.e account for output VAT when payment for invoices are received in the quarter and account for input VAT for expenses and bills paid in the quarter. Edited: no need on flat rate scheme
Or it may just be that the client is normally paid quickly so even if the accrual VAT scheme is used all invoices raised in the quarter are paid in the quarter, but 2 invoices were missed out in the last VAT quarter and he has included them on a later return?

If you can't speak to the previous accountant, can you check what has been included previously? Just make sure that invoices are not included twice and VAT on expenses accounted for twice. Then stick to whichever scheme you chose to go forward.

svet_lana

Thank you MarieNoelle for your quick respond. That's right. My client is under 1.35M threshold and this makes things much easier if I can use a cash VAT scheme. My client has given me his previous accountant's VAT return paperwork for the last three periods, so I could check what has been included previously and found 2 invoices that are included twice. Thank you so much for your advise! It was very helpful!