Company Tax Return, QuickFile report vs Ebay report

[LeeT]

Hi Folks,

I've been doing my tax return this week and I've ran into a issue with a difference between what QuickFile is reporting and my actual bank statements for the accounting period.

After going through all my invoices and purchases I have managed to find the culprit which is that my Ebay reports show higher income than what they have actually paid into my bank. I'm not certain as to why this is but I think some sales roll over to the next month so perhaps it balances out somehow.

My Ebay report shows £773.33 higher than my bank report for the accounting period. If I enter what I was actually paid by Ebay instead of what their reports say, the balance of my bank report is now +£55.54 to QuickFile and I should be able to balance this further.

I've gone back to redo all my Ebay reports to make sure they were correct and to adjust for refunds but there were only minor adjustments needed. The reason I use the Ebay reports is that it shows the total sales price with a breakdown of the commission fees and postage charges. The commission fees are deducted before I am paid but the postage labels are paid for individually from bank account so it would be a pain to add all these up individually as I send many items per day.

I was wondering if anyone would know what would be the best way to approach this issue?

Thank you for taking the time to read this.

 

[DWS]

As a Ltd Company you need to prepare accounts using the Accrual basis not the Cash basis, this means that you account for all transactions during that period, you may not have received a payment as yet but if the sale took place during the accounting period then that is where it is included and is taxable, the same for expenses.

 

[LeeT]

Okay, that's fine with me and makes sense but will there be an issue with the £773.33 discrepancy between the closing balances between Quickfile and my bank statements?

 

[Gyumri]

As a Ltd Company you need to prepare accounts using the Accrual basis not the Cash basis,

Not so - the cash basis can be used by companies below a certain threshold of turnover.

It's the easiest means of working out the vat returns. The accrual basis is a real pain for no gain whatsoever to HMRC as it receives the same VAT anyway in the course of trade.

Unless you use accountants from the big five who like to wear their tax inspector hats, I would stick with the cash basis.

 

[LeeT]

Thanks, that's useful to know. Do you happen to know what the threshold is please?

 

[DWS]

Thanks, that's useful to know. Do you happen to know what the threshold is please?

It’s not useful to know because it’s wrong!
Companies can not use the cash basis to prepare accounts, they can use it prepare and submit VAT returns but not their annual accounts.

 

[LeeT]

Okay, so I will be using the Accrual basis not the cash basis. I don't need to take any action yet so I will wait another day or two just to make sure I'm doing this right.

 

[LPB 123]

The eBay report is almost never accurate. You are better off creating a transaction report csv each month and doing sum all on the sales. This will give you an accurate figure.

You should also do this for your fees as well as there is a discrepancy between what they invoice you for and what they actually take in fees.

Your figures should then balance with your statement ending balances etc.

 

[Gyumri]

It’s not useful to know because it’s wrong!

DWS is of course correct - I have to eat a fair slice of humble pie (which can be rather tasty) because the OP is doing his or her annual accounts and not VAT returns.

The cash basis for VAT returns is ideal for smaller companies but even larger companies are unlikely to face any sanction for sticking to cash accounting, as HMRC ends up with the same money.

 

[LeeT]

Thanks for the replies, they are very helpful.

I have another question if anyone can help please, do I need to attach a invoice to each purchase I have made? I do have them all on file but not attached to the purchases invoices in Quickfile.

 

[Scalloway]

As long as your invoices are filed in a manner that means you can find them easily it does not matter where they are.

 

[LeeT]

Perfect, thanks for all the help folks.

 

[Daybooks]

Perfect, thanks for all the help folks.

Don’t forget that your sales should be reported gross of the commission deducted - which may impact on VAT registration if applicable.


Your latest £55 difference may be explained by way of a similar timing difference brought forward if applicable. I would make sure your closing EBay debtor figure is identifiable with receipts in the new year as this should give you confidence in its accuracy.

I recall that getting a backdated debtor list from QuickfFile and checking it reconciled against the Debtor Control account was a challenge in itself. It was possible but somewhat tedious!

Good luck.