Switching to VAT Cash Accounting on Sage 50

Due to the depressed business environment, many businesses have experienced a reduction in sales income, thereby becoming eligible for Vat purposes to account for sales on a cash receipts basis. This will have an impact on your Sage 50 accounting system and the following steps need to be considered…

  • Plan for the changeover for a future Vat Accounting Period  – it becomes a lot more problematic doing the changeover retrospectively where transactions have been entered onto the system after the changeover date
  • Ensure that all Vat transactions are Vat reconciled up to the changeover date
  • Ensure that all Sales Receipts, Purchase Payments and both Sales and Purchase Credit notes have been allocated on customer/supplier accounts
  • Check whether there are  any unallocated Sales receipts for which no invoices have yet been raised e.g. deposits
  • All outstanding Sales invoices which have already been Vat Returned will need to be marked as such so that after the changeover, when these invoices are paid that Vat is not duplicated – this will more than likely involve exporting data from Sage to Excel and amending the Vat status of invoices and reimporting the outstanding invoices back into Sage 50.

We have found after doing a number of these changeovers that each client differs and there can be a significant amount of work to be done on the Sage dataset in order to ensure that you account for Vat properly going forward. Please contact us for a discussion if you are planning to change your method for accounting for Vat on Sales.