Accruals VAT.

If a business has a VAT period which ends before the year end, for arguments sake, accounts end December, last VAT return is November.

How do you reconcile to the TB at year end?

November return = £100 liability

Add December sales VAT £20

Less December purchase VAT £10

Balance at TB £110.



  • wills135
    wills135 Registered Posts: 30
    Why on Earth did I put accruals. Doh.

    I did in fact mean invoice as an oppose to cash basis.

  • Bertie
    Bertie Registered Posts: 376
    That is there or thereabouts.

    Ultimately you want to mathematically get the two to agree with each other.

    In the main it is the same as a bank reconciliation.

    The issue with VAT is that at times things will leave you scratching your head.

    Before you get to calculating the reconciliation you need to ensure, for example; all sales have the correct VAT coded, tick and bash, else amend - same with purchases, capital asset purchases and sales.

    If the final VAT return does not coincide with the accounting year end, adjust in line with your calculation as above, remembering to adjust for any assets sold after VAT return. (When reconciling to the TB)

    You've not asked about Cash VAT - but that again is reconciled slightly differently. The TB will give a different figure to the final VAT return as in software the VAT will accrue in the input and output accounts even if it's not been paid / received. But the VAT return will pick up what has been paid / received.

    With VAT there can also be adjustments for various reasons. Learn the principles, rules and legislation first, you'll then know how the return and TB show look and interact together.

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