Reviewing my clients accounts I noticed that the software calculates FRS wrongly. It treats the gross sales as being inclusive of the FRS percentage instead of applying the FRS percentage to the gross sales. In the VAT Return sales are therefore understated and so is VAT.
Anyone else noticed this?
Replies (10)
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Hi Andy
Don't know what software they are using but the VAT paid under the FRS should be gross value of invoices in VAT period x flat rate percentage.
The quick check would be:
VAT = net turnover divided by 100 x 120 x flat rate percentage
presuming all sales at standard rate and constant flat rate percentage throughout the period.
If they are using the "cash based method" then the turnover would have to be adjusted for net debtors brought forward and net debtors carried forward.
Edit: I now see they are using Accountz - never used it I'm afraid.
Sorry Andy - I only realised it was a specific question about Accountz software after I'd posted.
I left my comment up there should anyone else need that info but at least by responding again I've bumped the thread in front of others who may have had the same problem as you have!
Seems a bit of a serious fail for Accountz if this is true.
I don't quite follow the problem
What do you mean by gross sales, Andy? Surely gross sales are inclusive of VAT, and therefore nothing further should be added.
Did you mean to say net sales? But then, what needs to be added is the actual VAT charged, not the FRS VAT.
Perhaps a numerical example will show me where my misunderstanding is.
Accountz.com
Hello Andy,
I am the CEO of Accountz,com Ltd and have checked your clients transactions. It seems that you client has not been using our software correctly and has manually created his/her own VAT code for the Flat Rate Scheme. To do this he/she would have to had to confirm that they wanted to Unlock the VAT Configuration Editor and agreed to the following message:
"Confirm Unlock Tax Configuration Editor"
"WARNING- this is a non reversible action"
By clicking 'OK' , you are confirming that you will be responsible for settting the correct Tax rates for your country and any other countries you trade with.
"Are you sure you want to unlock the Tax configuration?"
"YES/NO"
I can assure you that our Business Accountz products handle the Flat Rate Scheme correctly. Your client should have entered all transactions with the Flat Rate VAT code then at quarter end used our Eazy step 'Complete Flat Rate Return' this would have asked him/her their percentage rate and calculated the correct amounts.
Please feel free to Accountz on 01354 691650 if you need any further information.
Regards
Helen Linley