VAT RECONCILLAITION

VAT RECONCILLAITION

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I do VAT reconciliation every month but I always encounter a discrepancy.

1. So I need your advice to know how to specifically do Vat reconciliation such that at the end of the month I know what is due to tax office or owed to us. 

2. How do I treat Vat owed to us when we receive payment from tax office.

3. How do I terat import tax in accounts such that it does not outbalance my Vat controll account

Replies (5)

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By jndavs
04th Dec 2014 13:56

What are you actually asking for?

If there are specific problems, please give details.

Otherwise a bookkeeping course?

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By Gem7321
04th Dec 2014 14:00

VAT on sales - VAT on purchases = VAT due

 

I don't understand what you're asking?

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Replying to BirdnCo:
By johngroganjga
05th Dec 2014 09:02

Asking

Gem7321 wrote:

VAT on sales - VAT on purchases = VAT due

 

I don't understand what you're asking?

The OP asking how to account for the VAT balances in the books of the business, and in particular how to keep them in kilter with the VAT returns.

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By DMGbus
05th Dec 2014 09:25

Reconcile each time VAT return completed

I like to see the nominal ledger balances reconciled each time a VAT return is completed.   It can be tricky when cash accounting is operated as the nominal ledger balances will most usually be on an invoice basis.

At a particular VAT quarter end date the TB should show the following VAT liabilities in a cash accounting situation:

VAT return balanceADD VAT on debtorsDEDUCT VAT on creditors

Journals are required in the following circumstances to make things reconcile properly:

Car fuel scale charge (debit P&L car fuel / credit VAT liability a/c)Non-recoverable VAT under partial exemption calculations (debit P&L a/c non-recoverable VAT / credit VAT liability a/c)Capital Goods Scheme annual adjustments (which can be either debit or credit non-recoverable VAT and then credit or debit to VAT liability a/c)

As an alternative to the above "attention to detail" I see that some advisors are happy to just let the VAT balances roll forward / accumulate unchecked over a year (or several years) and consider that no reconciliation is necessary - this approach has the merit of saving hassle and time, but is not necessarily correct.

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Teignmouth
By Paul Scholes
05th Dec 2014 13:08

You might find it useful to use bookkeeping software....

where all this stuff is done for you.  If you do use it then maybe let us know which one.

As mentioned, the tricky bit is if you are cash accounting but enter in your books invoices in & out with their VAT totalled up.  In theory the difference between the balance on "invoice" VAT and "cash" VAT, that you pay over, will be the VAT on unpaid customer & supplier invoices.

Specifically with regard to import VAT this does go straight to the VAT control and into box 4 of the return.  In other words it's the same as getting a bill where the goods are £0 and the VAT £100.

Cheers

 

 

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