Fee paid this year but relating to previous one

I have a problem with accounting fee which has been paid during current tax year but is related to previous tax year activities. How this sort of thing should have been booked? I booked this as current year expense, but it appears that it has been included in my last year P&L during preparation of company tax return. This make s sense as the fee is related to the past period. Still as it has been booked during current year, I think I should do something so the same “expense” is not used twice so to speak. Any advice on proper booking of such events?

If you booked accrual for accountancy fee last year
Dr accountancy
Cr Accrual

You need to reverse this journal under the new year and then book the invoice as normal. Invoice and reversed journal will cancel out each other and if you are a vat registered make sure accrual booked are net of vat. Same goes for prepayments

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Thanks. I will definitely book an accrual this year. Great advice :slight_smile: The thing is I have none for the past one, as this was my first year of operation as limited liability company and honestly I had no idea about a lot of things, including that one. I just found out after trying to match P&L from company accounts with my Quickfile report. So I wonder what would be the correct course of action right now.

It can only appear if an accrual is booked last year or actual invoice, else last year wont have accountancy expense. If it not too material amount , perhaps leave it under current year as PY accounts are submitted

So your accountant has submitted your prior year accounts and tax return, and now you’re trying to get QuickFile to agree with what they sent in? As long as you haven’t run the year end lock process in QuickFile then all you need to do is add a journal back-dated to the last day of your previous year, doing debit accountancy fees and credit accruals. Set that journal to auto-reverse on the date you booked your accountant’s invoice as a current year expense, and then the debit from the expense purchase invoice will be cancelled out by the reverse journal’s credit line.

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I agree with Ian, that’s the best way to resolve.

Accountancy fees are one of those oddities where we can back date our fees to be included in accounts that have been prepared in some cases years later.

So I can see how it may throw people off when they try to reconcile a payment in a current year.

Exactly. Thanks a lot!

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