Query from client regarding UC

MonicaG

I have prepared standard accounts i.e. profit and loss plus balance sheet for a client in readiness for hr Tax Return. She is showing a profit of circa £10k. However, she is not happy to sign these as she has been giving income and expense figures to UC each month. My figures include closing stock, depreciation, removal of personal element of rent, plus a significant accrual for monies due to come in in relation to last year. She is questioning IF she agrees my figures whether she will need to pay back monies to UC and whether she will be in any trouble

phoenixd

Hi, I assume the figures she has been giving to UC are from you and relate to cash in/cash out. If this is right, explain to her that the final accounts you have prepared are done on accruals basis whilst what she has been sending to UC are cash-based. If figures are all correct, she shouldn't be in any trouble. HMRC is aware of the difference(s). If she's a sole trader, why not use cash accounting to make her life easier? If LTD, explain the above difference.