VAT Reconciliation Tutorials

The VAT Reconciliation calculates the VAT amount that is payable or refundable based on the invoiced-based model. It also supplies all the totals needed to complete a VAT return.

It is also a summary of the VAT Control account which is debited and credited from the various transactions like customer and supplier invoices and expenses.

The VAT payment or refund as calculated by the VAT Reconciliation should result in a zero balance on the VAT Control account after the payment or refund is recorded (excluding timing differences).

These tutorials explain how to perform a VAT Reconciliation for an organisation that has both WHT and VAT enabled. If you only have VAT Enabled certain steps (like choosing a type after clicking New) might not apply.

How to Create a VAT Reconciliation

1. Navigate to the Tax or VAT Reconciliation entry on your menu (e.g. Main Menu > Accounting > Tax Reconciliation).
2. Click New (button) > VAT.
3. On the form that is opened, complete these fields as follows:
   • Entity: Select a registered entity from the dropdown list (only applicable if you created more than one registered entity).
   • From: Only necessary the first time. Thereafter the date is automatically set.
   • To: Automatically set based on the VAT period but can be edited.
4. Click Items (next to Add) to open a list of transactions.
   • Check the checkboxes as needed:
     • Zero-VAT: Includes transactions on which VAT was not claimed or charged.
     • Out-of-period: Includes transactions that were not included on a VAT reconciliation yet but are dated prior to the selected period.
   • Click View (button)
     • Note: Columns can be added or removed using the Field Chooser (*). The layout can be saved from the Menu button.
   • Check the checkbox next to Status to select all the transactions or click the transactions individually to only add some transactions.
   • Click Add (button).
5. Check the transactions:
   • Transactions can be opened by right clicking a transaction and clicking Open Ledger on the context menu.
   • Transactions can be removed by right clicking a transaction and clicking Remove Transaction on the context menu or in bulk by checking all the transactions and clicking Remove (button).
6. Click Done (button) to finalise the reconciliation.
7. Click Output (button) and select a report to print (if templates are added).

---

How to Understand the Onscreen Totals

The forms and declarations are country specific. Please check with your accountant which rules apply to your country.

1. Out of Period
   • This column includes transactions that pre-date the VAT Reconciliation start date but that were not previously included in a VAT Reconciliation.
   • If you do not have to declare these amounts separately, you can ignore this column.
   • The amounts are included in the Total.
   • If you must declare these separately you must deduct the amounts from your Total, else you will be declaring / claiming amounts twice.
2. Total
   • The Output amount is the total VAT that was charged to your customers (whether or not they have paid the invoices) and must be paid over to your tax authorities.
   • The Gross amount can be calculated as follows: Output Amount x (100 + VAT Rate) / VAT Rate.
   • The VAT exclusive total is calculated by deducting the Output VAT form the Gross Amount. If all your sales include VAT at the standard rate, the VAT exclusive total should equal your total sales for that period.
   • The Input amount is the summation of all the input VAT claimed from multiple transactions. If various categories of Input must be disclosed separately, you must create a VAT Type for each category. Categories often needing their own VAT Types are bad debts, imports, and capital goods.
3. Balance Due
   • This balance is calculated by deducting the Input from the Output.
   • If the Output exceeds the Input the balance is the amount you must pay over to your tax authorities.
   • If the Input exceeds the Output, the balance is the amount you must claim back from your tax authorities. This balance is shown as a negative amount and in a red font.
     • Inputs should only exceed Outputs if:
       • You increased the amount of stock on hand.
       • You had to pay customs VAT on imported goods.
       • You purchased assets (e.g. new equipment) that you are allowed to claim the VAT back on.
       • You traded at a loss during the VAT reporting period.
       • You had a large amount of zero-rated sales against which you are allowed to claim inputs.
4. Transactions
   • Lists the net impact on VAT per transction type.
   • Transaction Types that had no transactions that include VAT are not listed.
5. VAT Types
   • Displays the input per VAT Type so that you can split the input claim between the various categories like capital and standard goods.

---

How to Edit a Completed Transaction

Follow this process if a transaction is locked because it is included in a VAT Recon.

1. Open a VAT Reconciliation.
2. Ensure that the checkbox next to Synchronise Ledger is unchecked (empty).
3. Right click the applicable transaction that you want to edit and click Open Ledger on the context menu to open the transaction on the right.
4. Right click the same transaction on the list and click Remove Transaction on the context menu.
5. Click Yes (button) to confirm you want to remove the transaction.
6. On the right panel:
   1. Change the status of the transaction to an editable status.
   2. Edit the transaction as needed.
   3. Click Done (button) or change the transaction’s status back to complete and click Save (button).
7. If the VAT Reconciliation was not finalised, click Items (button) next to Add.
   1. Check the Out-of-period checkbox if applicable.
   2. Click View (button) on the popup.
   3. The edited transaction should be on the list (unless you changed the date to a future date).
   4. Check the checkbox next to the transaction, or next to Status to select all the transactions.
   5. Click Add (button).
   6. Close the popup by clicking the X in the corner.
8. Complete the VAT recon as needed.

---

Learn More

---