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Sage Line 50 VAT Cash Accounting

 I have a client who was on VAT cash accounting who deregistered and I prepared the final VAT return. The Vat return just would not reconcile back to net balance of the 2200, 2201 and 2202.

There were outstanding debtors or creditors all balances were “Zero” on both debtors and creditors so I just could not understand why it would reconcile by a miserable £4.69 and was tempted to put in an adjustment for the amount instead of spending hours on it. However I persevered and found the cause. One of the suppliers had issued an invoice for £31.49 inclusive of VAT back in early 2010. A credit note was received for the same amount and matched up with the invoice and as such the Invoice was not paid.

I deleted both the Invoice and Credit note and reposted the Invoice and paid it posted the credit note and recorded a refund from the supplier (this corrected the bank reconciliation) and now the VAT report balances exactly to balances from accounts 2200, 2201 and 2202.

If anyone comes across something like the above scenerio it might be worth your while to check the above.


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16th May 2011 23:32

Probably the VAT on either the invoice or the credit was nil.

£4.69 is the VAT on the invoice of £31.49 at 17.5%. I suspect that the VAT on either the invoice or credit was nil. This can occur if a T0 tax code is used for one of them; or T1 was used for both, but the VAT box was manually changed to nil when it was entered. Sage will not let you allocate a T1 transaction aganst a T0; but will let you allocate transactions all with the same tax code, even if the amounts of VAT do not match up. Reconciling the VAT control account under cash accounting can sometimes be awkward for this and other reasons. I suspect almost all accounting computer programmes have prioblems reconciling VAT under cash accounting.

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