VAT Reconciliation - The Book-keepers Forum (UK)

Lorry10 · Veteran Member

VAT Reconciliation

Cheshire · Master Book-keeper

Hi Lorraine
Can you add your first name so that it appears on the posts under the signature bar) via ----Edit profile --->signatures. Saves everyone having to look your profile up each time.

Just a few thoughts initially.

Does the Accountant only do the VAT rec once a year for the year end accounts, or are they checking the actual vat submissions and bookkeeping records each quarter before the VAT is filed?

Who does the actual bookkeeping? Who prepares the actual VAT return? On what software?

Crucially - what VAT basis do they use? (I can guess, but I shouldnt assume)

Also - why would you want to charge less than the Accountant does for doing the same job?

Does your PII cover and prof body membership allow for this if this is a new area for you?

Lorry10 · Veteran Member

Hi Joanne,

Thanks for your reply. I submit the quarterly VAT Returns using the standard scheme and I only noticed on the last annual invoice from the accountant that reconciling the VAT was something that they charged for. My interest in doing it for the client is just because for a small start-up business with only four employees (including me who only works 4 hours a week), the accountant seems to charge a lot for completing the annual return and for any advice given. I would like to help the client in the early stages of her business.

I'm not currently registered to practise on a self-employed basis, I am employed by the business, but I am a registered member of the IAB and 2 exams short of the AAT Professional Diploma so would be interested in learning a new skill. I use SAGE 50 which my employer provides.

Leger · Master Book-keeper

Hi Lorraine

Did the accountant break the charges down, or was VAT reconciliation just listed as part of the work carried out?

I can't see how your employer would be able to save money because it is part of the doing the annual accounts, not a standalone procedure.

Lorry10 · Veteran Member

Hi John,

Thanks - it was just listed as part of doing the annual accounts.

Cheshire · Master Book-keeper

Hi Lorraine
Sorry I shouldnt have assumed you were self employed.

John is spot on - the Accountant will do the VAT rec as part of his annual checks. He will also do reconciliations on all the control accounts - bank, creditors, debtors, payroll etc. He will be detail and sense checking all of the numbers from each line on the trial balance.

So even if you do the full ANNUAL rec, he will re-check your figures, albeit you doing it might cut part of his bill depending on how involved it is and how confident he is in your work generally and the time he takes to produce this. Not sure if your VAT period end matches your year end, if not that involves a bit extra work for him, doing dummy VAT return for the short period.

Worth noting that HMRC will check the annual numbers against the VAT as well, much as they do the sense checks with your quarterly VAT return. For the latter they check does the output box 1 equal 20% of the box 6 figure routine....and they do phone folk if that is out if it seems out of line with the 'nature of business' recorded when it was first VAT registered (they know in some situations that would never work - eg margin scheme, business with exempt sales, or outside scope sales etc!!).

As part of you doing the quarterly VAT you should also be doing a reconciliation of that quarter anyway.

When you do the VAT return in sage you will be able to drill down the numbers to get an understanding of them and you should be ensuring items from previous quarters that have been unreconciled are being pulled through to this return and then ensuring you flag transaction in the report as reconciled this time.

But that isnt where your job ends, as a double check is still required to find any errors. There are various reports you can get from sage, but also you may need to check manual records (eg separate sales invoicing systems) to ensure everything is included as it should be.

Think how you reconcile ANY of the control accounts. Its the same process, almost, but you are doing a double rec - sales ledger and purchase ledger. Then any adjustments for eg bad debts, scale fuel charge, partial claims. With the added complication of, as I mentioned above, items from prior periods popping up in this return. At least you are on the most straightforward VAT scheme (unlike say the VAT margin scheme).

For CPD reading, I would suggest the likes of:-
-the appropriate AAT course (sorry just right now I dont know the one that covers control accounts - a dig around the AAT detailed syllabus will find it)
-Ive heard that Frank Wood does comething in one of his books about 'complicated vat and how to reconcile' or some such.
- see this post from a very respected source - at least gives you one half of the equation
https://www.rossmartin.co.uk/vat/vat/2160-reconcile-your-vat-to-your-turnover

HTH