VAT Tax Report - Accrual basis


I am complete new in accounting. Could someone explain me Accruals Basis Tax.
My understanding is that Accruals Basis taxes are added at a time when invoice get’s paid i.e. money reached bank account.

  1. I created report for Tax Report For the period from 1 Nov 2016 to 31 Jan 2017
  2. I have invoice issued on 29 Oct 2016
  3. Invoice got paid on 19 Jan 2017

I did assume that invoice should be included into tax transactions/summary because paid date is in period but it is NOT.
If I change invoice date from 29 Oct 2016 to 1 Nov 2016 it will be on report.

Is it bug in system or that’s how it should work?

Question 2:
Does VAT Calculation Worksheet work for Flat Rate VAT?

That’s exactly the opposite. :slight_smile: In accrual basis the taxes are added ar the moment the invoice is issued, not when you collect the money.

Regardless of your accounting being accrual or cash basis the tax is “always” added to the Invoice when the invoice is created / issued - how else would your customer know how much to pay you.

However, with accrual basis you owe the tax to the authorities based on the invoice date, but with cash basis you owe the tax to the authorities based on the banking date.

Thanks Daniel!!!

I was running mad trying to understand whats going on. You completely right I mixed terms I need cache reporting.

I am trying to match what my old accountant was calculating and it made no sense at all !!!



I see what you mean, yes tax is added to invoice on issue, but not necessary owed by taxman at that point.

My question is a collection point as per your second paragraph and I got terminology wrong I need to be doing cache base reporting. Hate that my accountant didn’t bother correcting me.


Flat rate tax schemes must use custom tax codes, because assessment rates vary so much by industry, transaction levels, etc. See the last section of this Guide:

I’m no expert on UK taxes, but I suspect the VAT Calculation Worksheet is not valid if you are using the flat rate scheme. I think the whole point of the flat rate scheme is to bypass all those calculations and attendant record-keeping. Some of our UK members can probably weigh in.

Also, for some extremely basic information on accrual versus cash basis accounting, see this Guide:

Thanks Tut,

Yes it does make most boxes in report irrelevant.

My accountant sent me before same looking report, but only collection tax had values and rest of it was 0, so I guess other software is producing it in that way.

It is not a big deal, tax summary gives me that single number fine. (After understanding cache vs accruals of course :slight_smile: