VAT - Changing from Cash Accounting to Standard

This describes a process of changing a business vat scheme from cash accounting to standard.

The difference in the schemes

Under the cash accounting VAT scheme output tax is only paid for in the VAT period in which payment is received from a customer. Input tax is claimed in the VAT period in which payment is made to a supplier. The change from the cash accounting to the standard scheme means that VAT on documents that are outstanding must usually be accounted for on the VAT return for the period in which the business leaves the cash accounting scheme and must be paid on the normal due date for that return.

Note in some circumstances the business may be entitled to pay the outstanding amount over the next six months. It is strongly recommended the user consults with their advisor for eligibility before doing this.

When can a change normally be made?

A business must leave the scheme if it becomes ineligible or it may choose to leave. Reasons for leaving the scheme voluntary may include: -

Again is is strongly recommended the user consults with their advisor.

The scheme must be left at the end of a VAT period.

Dealing with the Change in Liberty Accounts - Summary

Confirm the final Cash Accounting period

For example, if the final cash accounting period is to be the 31 December 2017 then any adjustments will need to be made normally when filing the return for the next VAT period 31 March 2018.

Process all outstanding transactions

Bring the period up to date by entering all outstanding items.

Accept the VAT Return

Accept and file the VAT100 return in the usual way, for example the 31 December 2017 period.

Run the All Trading Up To Report

The report is found under the VAT menu

HMRC - Reports - VAT Transactions - tick All Trading Up To

The report provides the details of all VAT transactions by VAT period that have been entered on the system on the Standard Scheme basis up to the date selected. The totals therefore represent the total VAT due.

Note the grand totals for VAT amount and Net Amount for outputs and inputs. Also note the totals for VAT amount and Net Amount for outputs and inputs for the current period.

It is suggested to use a spreadsheet to note these figures as in the example below.

Run the extract report for the details of all previously filed VAT returns on the system

The extract is found under the HMRC menu

HMRC - Reports - View Saved VAT Returns Reports - Click the CSV button at top left

A file is downloaded that may be opened in Excel. Sum the totals for columns BOX*_FILED columns, not the BOX*_CALC columns

Note these figures and enter them into the spreadsheet above

Compare the details on the All Trading Up To Report with the sum of all filed returns

Calculate the outstanding output and input tax amounts that will be due and retain the information. The output Side and Input Side adjustments represent the amounts of VAT that is outstanding from all closed VAT periods on the system.

Transactions that are dated in the current (open) vat period will change to the standard basis when the scheme is amended.

Switch the VAT scheme to Standard

On the VAT Configuration menu, change the scheme to Standard

HMRC - Configure VAT - VAT Scheme - Select Standard Scheme - SUBMIT

Transactions dated in the current (open) period will be picked up automatically so it is only those outstanding transactions for closed periods for which adjustment is necessary.

Closing the new Standard Accounting Period

Navigate to the VAT100 return as usual but before accepting amend column 2 with the adjustment amounts from the spreadsheet above. Then accept and file as normal.

Store all reports

Store all reports for future reference.

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