Recently the Scribe Academy™️ saw our very own qualified accountant, Hannah, talk through the secrets to a straight forward year-end and cashbook top tips in the "Local Council Accounting - From Zero to Hero" webinar.
First we ran a poll asking attendees which aspects of council accounting they struggled with the most. With it being the start of May, it was not surprising that Year End came out on top. With VAT & Reserves coming joint second.
Let’s take a look at some of Hannah’s advice on these topics…
Knowing when you need to be VAT registered is important. If you provide goods or services and receive additional income on top of your precept income, you will need to consider the amount of VAT that would be incurred on taxable supplies if you were VAT registered. If VAT incurred would reach £1000 or more for the financial year, you will need to become VAT registered.
As Making Tax Digital is now mandatory for all VAT registered councils, you will need to ensure you have sufficient software that allows you to keep VAT records, and submit VAT returns, digitally. Usually VAT returns will be submitted on a quarterly basis and it can be useful to have these quarters fall in line with the regular financial year quarters to keep things easier at Year End – this is also relevant to non-VAT registered councils who claim back VAT using Form 126.
If it is a long or onerous process to produce a VAT return or claim, this should be addressed. Think about how you can make this easier – would recording suppliers VAT registration numbers when adding the transactions help? If claiming VAT back via Form 126, consider adding the invoice date when entering the transaction to save you having to trawl back through paper invoices later on.
😬 Year End - It Starts With The Cashbook
The cashbook is key for a smooth Year End and therefore a fit for purpose accounting system is vital. Now is the perfect time to consider whether you need to make changes. Ask yourself, am I getting the information that I want? Am I having to do a lot of additional work to provide reports and populate Year End figures?
If the answer is yes, it’s a good idea to look at the structure of your cashbook and implement some improvements:
- Base the structure on your council budget/precept breakdown. This will help when trying to produce an actual vs budget report as you can allocate payments and receipts out to specific budget codes.
- Consider whether you need additional budget codes to further analyse information which could then assist in setting the precept. Alternatively, if you have a large list of budget codes, can these be cut down or simplified in order to make information easier to refer to?
- Also consider grouping budget codes together to report on. For example, you may have a village hall and want to know the income received from this but also the costs incurred. Therefore, you could group the hall hire income together with expenditure such as maintenance, electricity, cleaning etc. Particularly if you have committees or areas that want this information, it will help when providing them reports.
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