The HMRC guidance on foreign currency transactions and VAT, advises that for VAT purposes all sales and purchase transactions must be converted to British pounds sterling in your accounts. This hasn't changed with the introduction of Making Tax Digital (MTD).
To comply with this guidance in Sage 50cloud Accounts, you need to record your accounts with a sterling base currency and use the Foreign Trader feature to post sales and purchase transactions in other currencies.
Every business is different, but to switch your accounts to Sterling you would typically:
- Decide on the date you want to switch to sterling accounts. This must be in time for the start of your first mandatory MTD VAT period.
- Extract the customer, supplier, nominal and product balances for the last day of your non-Sterling accounts and convert these values to sterling.
- Create a new set of accounts with sterling as the base currency.
- Enter your opening balances in your new sterling accounts.
- Re-enter any outstanding invoices, credits and orders.
For help with this you may want to speak to your accountant.
TIP: If your base currency was set to Euros in error and you post values in sterling, you can't change the base currency setting. To correct this you should create a new set of accounts with sterling as the base currency and enter opening balances.