Incorrect VAT returns on Kashflow
I am writing to alert accountants with clients that use Kashflow set up with Fixed Rate Scheme (FRS) percentages and cash accounting basis that it could be calculating VAT incorrectly and their clients could be overpaying VAT. I've identified several clients where VAT could have been overpaid to the VATman if they had submitted the VAT returns using Kashflow. Luckily I spotted the problem in time!
The problem arises where sales invoices issued before 4/1/11 are paid after 3/1/11. In this case Kashflow incorrectly calculates the VAT on a cash accounting basis using the new FRS rate, not the FRS rate at the time the sales invoice was raised.
I advised Kashflow some time ago that this was an issue, but it has yet to be fixed (so much for quick fixes on cloud accounting software!), so I would suggest that accountants check their clients' VAT returns filed for periods ending on or after 31/1/11 to ensure they are correct.
I haven't checked yet, but it is potentially possible that the same problem will occur on previous rate changes. For example when the rate went down to 15% or back up to 17.5%, which could result in under or over paid VAT if Kashflow did not handle the calculations correctly.
Worryingly, there is no easy to use facility on Kashflow to amend VAT return figures should they be known to be incorrect, so users may not be able to file VAT returns online via Kashflow and may have to resort to other means.
It is also difficult for users to identify the error because the Kashflow VAT detail report does not show how it has arrived at the calculation for Box 1 or box 6. The user has to know how to calculate the figures for these entries.
- Where has Portia gone? 3,945 100
- What are other accountants having for lunch? 486 18
- RTI Payroll ID 841 21
- CT600 for first year UK company trading abroad 64 5
- Moneysoft or Sage payroll with auto enrolment? 165 4
- OMG HMRC !!!! Employ some ppl!! 153 3
- VAT flat rate scheme 496 9
- Computations in HMRC accounts software 74 2
- EIS 3 Processing Delays at HMRC 164 2
- Unwarranted VAT assessments 108 1
- micro entity balance sheet query 195 5
- Virtual Assistants 100 1
- Where can I report and accountant for defraud 407 6
- Overlap profit 128 1
- Sole trader paying Class 1 NIC 129 1
- Stock of photos to capatilise 328 14
- Spousal transfer and PPR 805 34
- Rogue Accountant 3,645 57
- Assigning loan from Company to adult children 110 2
- Practice management software 1,122 21
- Services via intermediaries and new HMRC reporting requirements 826
- Pensions Regulator 467
- How hard is it to reduce a code? 433
- Sanzar 330
- How do you do it 320
- Digital marketing focus group 308
- Kashflow balance sheet difference 280
- new investor structure 192
- Bed & Breakfast trade via Limited Company 189
- Fit for purpose 187