I’m working on completing my year end accounts for last year which follow the HMRC tax year and have just discovered that my estimated profits are way too high due to an invoice of around £13,000 that was created 1st April.
I am a sole trader by the way. So the invoice refers to a job that I was only paid for in May and all purchases for this work were invoiced in the new tax year as well. So the expenses for that particular invoices which were quite high, will only show in next year’s tax return.
As this will create major tax issues for me is there any way I can modify the invoice to bring it forward a week so it registers in the current tax year? I’ve also completed a VAT return for the period so quickfile has locked that account period. Any suggestions on whether I should journal the amounts or how I can get around this?
You will have to talk to a qualified accountant about this. If you actually did the work in the current tax year then there may be an argument that you can treat the invoice as a prepayment and book the income at the date the work was actually done but I wouldn’t rely on lay advice from the internet here, definitely ask a professional.
Thanks, I’ve spoken to my accountant and he says because I was paid for this in the current year and most of the expenses for it were in this year I can adjust it so it all shows for this year rather than some in last year.
Question is though how can I make this change in quickfile if the accounts are locked due to a VAT return having been submitted?
Normally two journals would suffice, first one to adjust down the sales in the last year and a second one to bring back into this year. You’d need to refer to your account on how this journal should be entered, but it would likely involve the following accounts:
Sales
Debtor
Control Sales Tax
To actually edit the invoice issue date you’d need to roll-back the VAT return, which is why probably journalling would be more straight forward.