Sometimes you might even think “Not the suspense account again”!
We’re here to clear up a few doubts on what is this all about – and why we keep asking you for it!
Trading in a busy field such as hospitality, you may not always have time to spare on your paperwork. That’s what we’re here for!
When we process your paperwork and start allocating payments to different suppliers from the bank, we will pick up things that don’t quite add up. This is where the suspense comes in.
So what is a Suspense Account?
The Suspense Account is used for recording all or part of a transaction, which cannot be matched to a bill. Once we know who the transaction is associated with, we can move it into the right account.
But this is just a temporary measure. They must be cleared off and closed by the end of each accounting period.
What do we do?
When we see a payment made on your bank statements, but we haven’t seen the invoice, we transfer this amount to Suspense. Sometimes it could be a bulk payment to one of your suppliers, or a cheque payment when we haven’t received a summary of cheques paid.
Missing invoices sometimes carry allowable VAT, which can be reclaimed against VAT payable.
As HMRC has very strict rules about what you need as evidence to reclaim VAT from an expense, any items in the suspense account will not be used to calculate your VAT reclaimable.
If we receive them at a later date, we can reclaim the VAT on a future return.
If you have received a suspense account, all you need to do is find any missing invoices and send them in to us. If you are unable to find any information, sending a little note explaining what the invoice was for will allow us to take the item out of suspense – however, as before, we will be unable to reclaim any VAT.
So don’t worry if we send you a suspense – we’re just making sure you get the most back against your VAT!