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How to account for no sales records

How to account for no sales records

A sole trader t/a mot garage / vehicle repairs has approached me to prepare the annual accounts and tax return. No records of sales have been recorded for the full year, other than debit/credit card payments paid into the bank and also cheques from customers paid in with a paying in book with no details (no cash paid in to the bank from customers).

The business deals with quite a lot of cash because staff wages are paid via cash and I would say 60 to 70% of purchases as well.

How would other practitioners / accountants / technicians or bookkeepers deal with this?

As no balance sheet is required and HMRC were not very helpful the only way I can think of to prepare a profit and loss would be to:-

Create a cash book from the bank statements.

List all the purchases and expenses from the invoices then match any that have been paid via the bank.

As the business has no credit terms with it's suppliers and pays on delivery (out of choice), the difference between what has been paid via the bank and the full value of the purchases should be the cash paid out, therefore the cash received as sales; excluding profit.

Add this cash sales amount to the identified sales in the bank receipts, then add any other known cash payments for instance wages, drawings etc again adding this to the sales. 

The only thing missing (I think) would be the profit which would there be an average gross profit for this particular business that I can use? 

Any opinions please, tell me if I am just completely wrong here. 



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16th Aug 2012 23:44

What's that noise?

Alarm bells ringing.

No record of sales - I don't believe it (no pun intended).

So a job gets done and absolutely no records of that work are kept? What if the customer queries the bill, assuming he gets one?

This business isn't keeping proper books and records, lets hope they don't get an inspection from HMRC.

Are they registered for vat? If not, should they be? How would you know?

Payroll - is this done properly? PAYE/NIC paid?

That's just for starters.

I'd avoid this like the plague.



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17th Aug 2012 07:54

How many staff?

VAT registration is pretty much a cert if he has employees. 

Is this first year accounts, or has he been warned previously and ignored the advice? If not first year ring his previous accountant. If first year, it costs a lot of money to set up a repair/MOT garage. I wonder if he has kept the purchase invoices?

A total nightmare. Have you warned him of the potential consequences? If you do prepare the accounts/tax, makes notes on the white space of the SA, and tick the box for estimated figures, and get your money up front. He may not be able to pay you if he gets a large VAT/tax liability.

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By neileg
17th Aug 2012 09:16

When I were a lad....

This sounds like the sort of incomlete records case I cut my teeth on. Yes, the client needs to dramaticly improve their record keeping but it's hardly a plague job.

So long as your fee is assured there's lots af valuable work you can do bringing this client up to scratch.

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By Tosie
18th Aug 2012 19:58

How I would do this:

Enter purchase invoices and ask client how much he marks up.

The MOT's that he has completed are computerised so no problem there.

Ask his hourly rate and review wage records for overtime then assume 95% labour chargeout.

Then tell client his calculated sales and guess what the sales invoice books appear as if by magic


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