Callback
*
*
*
*

Sage and VAT Flat rate scheme

C M
Cleaning Team
Member Since:
7th Mar 2010
Telephone:
01158220482
Location:
Halesowen
Posts:
200
Posted: 2nd Aug 2010 - 18:41 Quote

Any book keepers or accountants with experience of Sage Instant able to tell me what the hell I need to do to account for Flat rate VAT in Sage Instant accounts?

I have found loads of articles on Google talking about cr this from there to the other place and then dr something back to somewhere else - can anyone explain in English what I need to do?

I currently am showing my VAT collected in 2200 and then my VAT claimed 2201 - normally one minus the other is the VAT done but with flat rate I take 9.5% of the gross turnover and thats what I send to HMRC but how do I then balance those two accounts? I assume I also need a new nominal account for my "profits" from flat rate VAT?

Help!!!!!!!!!!!!!!!!!!

Jason

View Profile Send Message Leave Testimonial Find Posts
 
Member Since:
1st Dec 2008
Telephone:
01438 832724
Location:
Hitchin
Posts:
2297

My Links:
Posted: 3rd Aug 2010 - 10:30 Quote

I don't think Sage 50 supports the flat rate scheme as such. TASBooks does, I think, as do one or two others (Kashflow/ Winweb?), but it isn't something that is covered by all systems.

However, I think the normal approach is as you suggest. You pay your flat rate percentage on the gross sales figure (including VAT), and there will obviously be a difference when this payment is measured against 'normal' VAT. I would suggest that this difference is moved via a journal posting from the balance sheet to the profit-and-loss account as income (create a new nominal account for it). This could be done annually just to reconcile the accounts, and you should end up with a few quid extra 'profit'.

If you don't, of course, then you need to drop out of the flat rate system!

David Hardstaff http://davidhardstaff.com/img/winweb_frog_small.jpg

E: Send me an email ...
T: 01438 832724
M: 07722 605545

http://davidhardstaff.com/img/business_mentor_sf.png                                   

Affordable, Flexible, Integrated and Customisable ...

Join me as a Winweb Virtual Assistant - click here to find out more!

View Profile Send Message Leave Testimonial Find Posts TWEET ME @david_hardstaff
 
Andy Thackeray
Thackeray Associates Accountants
Member Since:
12th Nov 2009
Telephone:
01246 386660
Location:
Chesterfield
Posts:
101

My Links:
Posted: 3rd Aug 2010 - 12:11 Quote

Since you are not recovering any input (purchase) VAT*, the business costs and overheads need to be shown gross in the accounts. All cash, credit card & bank payments/supplier invoices/credit notes should be posted without VAT split off - there's no use of a/c 2201.

Sales invoices/credit notes are raised normally.

When it's time to do the VAT return, calculate your FRS VAT payment and the difference between that and the Outputs recorded on a/c 2200 (for the same period) should be moved by Nominal Journal:

Dr 2200 - VAT for the period covered by return

Cr 2202 - VAT liability for the period covered by return

Cr 4000 - Difference

The 'profit' element is additional sales, so no additional account is required.

You would then post the payment or receipt to 2202.

As always with Sage, be very careful of postings made after a VAT period with dates prior to that when doing the above calculations. It's the bane of an accountant's life tracing these around the system (along with deleted transactions).

* except for individual capital items in excess of £2k

Andy Thackeray
 
Thackeray Associates Accountants
 
T: 01246 386660 M: 07868 710706 E: andy@accountancyltd.com
Registered office: Suite 3, Lex House, 21 High Street, Staveley, Chesterfield Derbyshire S43 3UU
Registered number: 07064131 (Registered in England and Wales)

Thackeray Associates Accountants

View Profile Send Message Leave Testimonial Find Posts TWEET ME @T_Associates
 
Leigh Jones
McCabe Ford Williams
Member Since:
4th Aug 2010
Telephone:
07834207842
Location:
Maidstone
Posts:
10
Posted: 4th Aug 2010 - 17:42 Quote
Hi Jason I have not fully read the other posts so apologies for any duplication here. If you run the VAT wizard in the usual way for the quarter end it shoudl automatically journal the VAT into the VAT liability account 2202. You can then compare this to your 9.5% and journal the difference to a sales code. I usually have a separate code to show the profit from the flat rate VAT. Good luck

Leigh Jones ACCA

Accountant

View Profile Send Message Leave Testimonial Find Posts
 
Graham Smith
Making Sense of Numbers
Member Since:
30th Jan 2008
Telephone:
01993 771100
Location:
Witney
Posts:
4417

My Links:
Posted: 4th Aug 2010 - 20:42 Quote

One of the reasons VAT flat rate can be a pain.

Sage 2011 (released this week can now cope, so when/if you upgrade should be better).

Andy's explanation looks good, if you are OK with doing journal entries, shout if you need help with that bit

Graham Smith Business Services

Budgeting     Bookkeeping    Management Accounts

Graham Smith

T: 01993 771100

M: 07771 716588

E: graham.smith@gsbs.co.uk

W: http://www.gsbs.co.uk

Tw: @grahampsmith

 

View Profile Send Message Leave Testimonial Find Posts TWEET ME @grahampsmith
 
C M
Cleaning Team
Member Since:
7th Mar 2010
Telephone:
01158220482
Location:
Halesowen
Posts:
200
Posted: 4th Aug 2010 - 20:51 Quote
Quote:

One of the reasons VAT flat rate can be a pain.

Sage 2011 (released this week can now cope, so when/if you upgrade should be better).

Andy's explanation looks good, if you are OK with doing journal entries, shout if you need help with that bit

As we use Sage Instant and not Sage 50, do you know if this feature is included in the latest Instant Accounts too? We are on v15 and would consider an upgrade for this feature alone.

View Profile Send Message Leave Testimonial Find Posts
 
Fran Tyler
First Call Financials
Member Since:
26th Apr 2010
Telephone:
0117 379 0810
Location:
Bristol
Posts:
847

My Links:
Posted: 4th Aug 2010 - 21:06 Quote
Quote:

Since you are not recovering any input (purchase) VAT*, the business costs and overheads need to be shown gross in the accounts. All cash, credit card & bank payments/supplier invoices/credit notes should be posted without VAT split off - there's no use of a/c 2201.

Sales invoices/credit notes are raised normally.

When it's time to do the VAT return, calculate your FRS VAT payment and the difference between that and the Outputs recorded on a/c 2200 (for the same period) should be moved by Nominal Journal:

Dr 2200 - VAT for the period covered by return

Cr 2202 - VAT liability for the period covered by return

Cr 4000 - Difference

The 'profit' element is additional sales, so no additional account is required.

You would then post the payment or receipt to 2202.

As always with Sage, be very careful of postings made after a VAT period with dates prior to that when doing the above calculations. It's the bane of an accountant's life tracing these around the system (along with deleted transactions).

* except for individual capital items in excess of £2k

I am definitely with Andy on this one - he has laid it out in simplistic terms exactly as I would have told you to do it. And yes be careful if your posting dates as there is a tendency to forget to change journal dates!

If you are still not sure, give me a ring!

Fran

Make that Call and solve all your accounting problems in one go!

Office: 0117 379 0810 Mobile: 07968 122049

View Profile Send Message Leave Testimonial Find Posts TWEET ME @Frangrenade
 
C M
Cleaning Team
Member Since:
7th Mar 2010
Telephone:
01158220482
Location:
Halesowen
Posts:
200
Posted: 4th Aug 2010 - 21:40 Quote
Quote:

Since you are not recovering any input (purchase) VAT*, the business costs and overheads need to be shown gross in the accounts. All cash, credit card & bank payments/supplier invoices/credit notes should be posted without VAT split off - there's no use of a/c 2201.

Sales invoices/credit notes are raised normally.

When it's time to do the VAT return, calculate your FRS VAT payment and the difference between that and the Outputs recorded on a/c 2200 (for the same period) should be moved by Nominal Journal:

Dr 2200 - VAT for the period covered by return

Cr 2202 - VAT liability for the period covered by return

Cr 4000 - Difference

The 'profit' element is additional sales, so no additional account is required.

You would then post the payment or receipt to 2202.

As always with Sage, be very careful of postings made after a VAT period with dates prior to that when doing the above calculations. It's the bane of an accountant's life tracing these around the system (along with deleted transactions).

* except for individual capital items in excess of £2k

Thanks Andy - the reason for tracking purchase VAT to ensure that we are actually better off using FRS than standard VAT accounting. This way I can work out each quarter if we have paid more or less VAT using FRS so we are fully informed about the pros and cons of the scheme. Is this a fair thing to do?

Obviously as I have been doing this I have a Debit showing in 2201 - how do I now remove that so it doesn't show on the balance sheet? My understanding is that if I journal it I must move it another account i.e. credit 2201 and then debit somewhere else with the amount taken from 2201? Where should that somewhere else be so it is "ignored" on financial reports etc?

Thanks

Jason

View Profile Send Message Leave Testimonial Find Posts
 
Graham Smith
Making Sense of Numbers
Member Since:
30th Jan 2008
Telephone:
01993 771100
Location:
Witney
Posts:
4417

My Links:
Posted: 5th Aug 2010 - 00:11 Quote

Jason - it gets credited to 4000 according to Andy's example (this is general sales, or alternatively you could put it into another nominal around the 4000s if you want to keep it separate ) - there is a code for misc income I think.

Looking at Sage instant it looks ike it still isn't there - I will give my account manager a call tomorrow to confirm

Graham Smith Business Services

Budgeting     Bookkeeping    Management Accounts

Graham Smith

T: 01993 771100

M: 07771 716588

E: graham.smith@gsbs.co.uk

W: http://www.gsbs.co.uk

Tw: @grahampsmith

 

View Profile Send Message Leave Testimonial Find Posts TWEET ME @grahampsmith
 
Chris Maslin
Maslins Accountants
Member Since:
5th Oct 2009
Telephone:
01892 888 010
Location:
Tunbridge Wel...
Posts:
3538

My Links:
Posted: 5th Aug 2010 - 07:45 Quote

Jason, appreciate this isn't the answer you're looking for, but most of the online packages happily deal with the flat rate scheme. I know with FreeAgent, whilst looking at the return, you can simply turn your flat rate % on/off/on again, making it really easy to do as you say, compare whether you're better off on it or not.

Whilst you're using Sage, this calculation should be fairly easy to do manually though. Assuming you're doing VAT returns on the cash basis, just look down the receipts side of your bank, add them all up for the quarter (ignoring any transfers from other bank accounts you may have) and multiply by your flat rate %. Compare this to the "normal" figures Sage gives you.

Maslins LtdMVL Online Ltd

View Profile Send Message Leave Testimonial Find Posts TWEET ME @Chris_Maslin
 
David Popely
DP Associates
Member Since:
31st Jan 2008
Telephone:
0800 298 5011
Location:
Ilminster
Posts:
54
Posted: 5th Aug 2010 - 08:36 Quote

Looks like you are well covered on this now, but if you still need any help int he form of a telephone conversation, give me a call on 07957 825714

Best wishes

David Popely
DP Associates

David Popely
DP Associates
knowledge in an uncertain world

http://www.dpassociates.net
0800 298 5011
davidpopely@dpassociates.net

View Profile Send Message Leave Testimonial Find Posts TWEET ME @dpassociates1
 
C M
Cleaning Team
Member Since:
7th Mar 2010
Telephone:
01158220482
Location:
Halesowen
Posts:
200
Posted: 5th Aug 2010 - 09:20 Quote
Quote:

Jason - it gets credited to 4000 according to Andy's example (this is general sales, or alternatively you could put it into another nominal around the 4000s if you want to keep it separate ) - there is a code for misc income I think.

Looking at Sage instant it looks ike it still isn't there - I will give my account manager a call tomorrow to confirm

Thanks Graham - I have moved the "profit" from FRS into a new code so I can track it but I still have a value in my purchase tax box (2201) which currently shows as a liability despite it obviously not being. I need to move that off my balance sheet otherwise by the end of the year it will show 4 x liabilities which are incorrect - is there either a code or a number range in the codes which it can be moved to where it will not show up on the balance sheet?

View Profile Send Message Leave Testimonial Find Posts
 
C M
Cleaning Team
Member Since:
7th Mar 2010
Telephone:
01158220482
Location:
Halesowen
Posts:
200
Posted: 5th Aug 2010 - 09:21 Quote
Quote:

Jason, appreciate this isn't the answer you're looking for, but most of the online packages happily deal with the flat rate scheme. I know with FreeAgent, whilst looking at the return, you can simply turn your flat rate % on/off/on again, making it really easy to do as you say, compare whether you're better off on it or not.

Whilst you're using Sage, this calculation should be fairly easy to do manually though. Assuming you're doing VAT returns on the cash basis, just look down the receipts side of your bank, add them all up for the quarter (ignoring any transfers from other bank accounts you may have) and multiply by your flat rate %. Compare this to the "normal" figures Sage gives you.

If we weren't so embedded into Sage now I would consider moving - it is unbelievable that the number 1 accounting software company in the UK does not support this especially in their small business product when FRS is designed for small businesses!

View Profile Send Message Leave Testimonial Find Posts
 
Graham Smith
Making Sense of Numbers
Member Since:
30th Jan 2008
Telephone:
01993 771100
Location:
Witney
Posts:
4417

My Links:
Posted: 5th Aug 2010 - 09:35 Quote

Jason

OK, the 2201 code should not have been needed (apart from capital items, I guess). Unfortunately I am not an expert in FRS workings, so I would have to look at your setup. If you would like me to do that (free of charge) PM me and I will sort out how to do that.

As an aside, KashFlow does allow migration direct from Sage very successfully. If you want to have a look go to my website and the KashFlow area, or click on the link below.

Regards

Graham

Graham Smith Business Services

Budgeting     Bookkeeping    Management Accounts

Graham Smith

T: 01993 771100

M: 07771 716588

E: graham.smith@gsbs.co.uk

W: http://www.gsbs.co.uk

Tw: @grahampsmith

 

View Profile Send Message Leave Testimonial Find Posts TWEET ME @grahampsmith
 
Duane Jackson
KashFlow Software Ltd
Member Since:
31st Jan 2008
Telephone:
020 7403 0101
Location:
London
Posts:
49

My Links:
Posted: 5th Aug 2010 - 10:25 Quote

Just to confirm, KashFlow does indeed support FRS - both for cash and non-cash accounting

Duane


Tweeting here, blogging here.

 

View Profile Send Message Leave Testimonial Find Posts TWEET ME @duanejackson

To reply to this topic please sign in or register.