Hi,
I have to do a manual VAT reconciliation for the year ended 31 December 2010. However, the VAT quarter ends January 2011, plus the company accounts for their VAT by cash accounting. Can someone give me a step-by-step guide as to how to do this? I have all of the VAT returns for last year.
Thanks in advance.
Replies (3)
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You only need the VAT return for January 2011
First, deduct the January 2001 receipts and payments from the figures on the January 2011 VAT return to get to the cash accounting liability at 31st December 2010.
Then, add the VAT content of debtors (unpaid sales) to outputs and the VAT content of creditors (unpaid purchases) and you should agree with the balance on the VAT accounts at 31st December 2010.
Finally, advise the company to change its VAT quarters to calendar quarters, so you don't have to apply the first step in future years.
Vat rates
Just one word of caution I do a similiar exercise for the company I work for and they have quite a few old debts, make sure you take into account the varying VAT rates over recent years if there are old debtors/creditors i.e. dont just apply a percentage of the total if there are old balances.