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• # 101586
• Sun 21 Sep 2014 07:44 AM

Hi,

My Client is changing to the flat rate fat scheme (invoice based). They are currently on the standard scheme, the application is in the process of going through but they have requested that it started from the beginning of this period (beginning of August). I have been recording the vat normally in sage (I have sage instant 2011) and am unsure what to do now. I can't change to the flat rate vat scheme in sage until i reconcile all the transactions. I understand that purchases should have been recorded as T9 but don't really want to go through and change them all.

Can anyone advise the best way to proceed. Would it be acceptabe to post the VAT on purchases back to the relevent expense/ purchase accounts via a journal entry. Then run the standard VAT return reports for this period and calculate the flat rate myself. I could then post the difference to a sales code??

Any advice would be welcome

Thanks

Elle

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• # 101595
• Sun 21 Sep 2014 09:56 PM

Hi Elle,

You should really continue using the standard VAT scheme until you get official notification from HMRC that your client has been accepted into the FRS scheme.  In my experience this type of change usually happens at the end of the current VAT period so the next VAT return may have to be under the old rules.  Whatever the start date is you will have to account for VAT as normal until then and it is a whole lot easier to manually prepare a VAT return and adjust any unnecessay input VAT for the FRS scheme in Sage, or any other kind of recording system, than it is to do it the other way around. 

Once you know the start date for the FRS scheme, prepare a VAT return for the period up to that date, reconcile it and if necessary, submit to HMRC.  You will then be able to change your VAT scheme.  You will get warnings if you are currently on cash accounting but you can ignore them provided that you know your current data is correct.

• Roz

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• # 101612
• Wed 24 Sep 2014 10:11 AM

I agree with what Sharon and Roz have said.

I would also point out that the Flat Rate Scheme cannot be used in conjunction with the Cash Accounting Scheme. So if you've been using CAS you'll need to switch to Accrual basis at the same time you introduce FRS.

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• # 101626
• Wed 24 Sep 2014 06:28 PM

Hi PhilCo

I feel you may be incorrect in what you say......please tell me if I'm wrong.

I have a client that is on FRS and we do cash accounting........albeit with a different name 

Notice 733 (April 14) section 2.7 says 

Cash Accounting - May be used with FRS....No, but......the flat rate scheme has its own cash based method that is very similar to the cash accounting scheme......see section 9

Section 9 says it's now called 'The Cash based turnover method'

Section 9.3 poses the question...What if I used Cash accounting before joing the FRS.......answer - You can carry on as before. There is no need to pay the VAT your customers owe you when you change schemes.....

Carol

• Carol Saunders
  Lady of Ledger Book Keeping
  Telford, Shropshire

  
  

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• # 101629
• Wed 24 Sep 2014 07:51 PM

Thanks, I have it sorted now. They are invoiced based and are staying invoice based just changing to FRS but i just need to continue to record as normal then change the scheme when i know the date. I had got myself confused with some advise on another forum.

Edited at 24 Sep 2014 07:52 PM GMT

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