Ive recently Purchased a New Van. Whilst trying to ensure Ill receive VAT back on this amount (£3,000) I see I’m on the Cash Accounting and not Accrual method. This has been my mistake at the start.
I see in the settings the two options but I’ve not changed as I’m not sure how to roll back if it is not right returns due etc after changing.
What exactly should I do to ensure the correct VAT is paid/reclaimed once changing to accrual?
Changing from cash to accrual or vice versa won’t do anything to the historic records or change existing or newly created invoices in any way. It will just use a different set of calculations when you run your next VAT return.
Having said that when you run a VAT return, on cash accounting payments are locked down, on accrual accounting invoices are locked down. Switching the accounting method may cause all unlocked items to be brought forward into the next VAT return, so you may see some unusually high figures. The way to solve this is to go into the VAT settings and move the start date forward to the beginning of the next VAT return. This will stop the items being brought forward although you may still need to make some manual adjustments for items in earlier periods that weren’t reconciled.
The bottom line is there will likely be some manually adjustments needed when changing VAT accounting methods, always download and check your backing report before submitting.
Thanks Glenn.
Q’s…
Will it be clear what hasn’t reconciled?
The “likely” manual adjustments are entered in the Vat returns page. I’m kinda lost as to how I know what each should be. Sorry
Going from cash to accrual you’d need to isolate any unpaid invoices before changing accounting methods and ensure that these are manually brought forward into the next VAT return. Once you change to accrual, QF will only report those invoices raised in the VAT period for which you are filing.
I’d recommend getting the help of your accountant to double check things if you have any doubts.