I have a client who just changed accounting. The amount on the opening balance sheet on Creditors was described by previous accounting as "Flat Rate income received in advance".
It is the "profit" obtained from the use of the flat rate VAT scheme. More precisely, it is the difference between the VAT on sales (20% that the company collected from customers) and the VAT that the company paid to HMRC by using the flat rate VAT scheme.
My question is whether the previous accounting correctly showed such a profit?