This article aimed at accountants explains how FreeAgent handles the cash accounting scheme.
If your client has set their VAT returns to cash accounting, this is what happens when they enter a sales invoice.
Automatic posting of VAT to separate code
The VAT element of the invoice is posted to a separate 'Deferred VAT' code.
This will then not appear on the VAT return until the invoice has been paid.
When payment is received
Once the invoice has been paid, FreeAgent will automatically post a journal to move the VAT out of the deferred code.
And into the 'VAT Charged' code.
It will also put this amount on the VAT return in the quarter in which it was paid.
Your client doesn't need to worry about making sure the VAT goes on to the return in the correct period.
Bills as well as invoices
FreeAgent will do the same for bills, putting the input VAT into the 'Deferred VAT' code, until your client pays the bill, when it will automatically journal the input VAT into the 'VAT Reclaimed' code and put it on the VAT return.
What about bank payments that don't relate to bills?
FreeAgent will pick up the input VAT on any payments straight away.
So you and your client don't need to worry about the figures being correct. FreeAgent handles the VAT returns smoothly.