Correcting VAT errors in accounts

Discussion in 'Accounts & Finance' started by Philio, Nov 1, 2010.

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  1. Philio

    Philio UKBF Newcomer Free Member

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    Over the last couple of weeks I have been entering my accounts information into Sage to complete my year end accounts.

    I have everything entered, it all matches my bank statements/balances perfectly, which is a good start, however when I calculate the VAT returns within Sage there are some small inconsistencies.

    I'm not sure how to proceed with this, I am certain that the values that Sage has given me are more accurate as I know I made one or two guesses when I filed the original returns (whereas I have checked and double checked all data I've entered into Sage to ensure accuracy.

    The most logical thing to do seams to be to delete the incorrect transactions and replace with the correct values generated by sage, then add any amendments to my next VAT return. Obviously this means my records on Sage then will not quite match my statements (until later in the following tax year).

    I'm not an accountant (as you have probably have guessed) so would appreciate any advice on how to resolve this issue.

    Thanks very much.
     
    Posted: Nov 1, 2010 By: Philio Member since: Nov 1, 2010
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  2. MyAccountantOnline

    MyAccountantOnline UKBF Legend Full Member

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    I think in summary what you are saying is that your Sage data is correct, and the VAT returns you submitted to HM Revenue & Customs were incorrect - if thats the case you can (subject to the amount involved) simply adjust the next VAT return for the errors. Then, as you say, after the year end the VAT paid will match that due according to your Sage records.

    Here's a link to HMRC's website explaining about VAT errors - http://customs.hmrc.gov.uk/channels...ntent&id=HMCE_CL_000077&propertyType=document
     
    Posted: Nov 1, 2010 By: MyAccountantOnline Member since: Sep 24, 2008
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  3. Philio

    Philio UKBF Newcomer Free Member

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    Thanks very much for the info Nicola.

    I had a chat to a friend who also runs a small business this morning and he said pretty much the same thing, reconcile in the next return.

    I'm only actually £20 off, so it's not a big mistake!
     
    Posted: Nov 1, 2010 By: Philio Member since: Nov 1, 2010
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  4. Philio

    Philio UKBF Newcomer Free Member

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    Just had a look at it an the only issue now is I cannot reconcile the VAT within Sage, as obviously the figures don't match the payments. Is this a problem or do I just start to reconcile from the next return onwards?
     
    Last edited: Nov 1, 2010
    Posted: Nov 1, 2010 By: Philio Member since: Nov 1, 2010
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  5. MyAccountantOnline

    MyAccountantOnline UKBF Legend Full Member

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    The VAT due per Sage wont agree to the VAT paid if you've made some small errors, but once you adjust for these on the next Return it will all balance.
     
    Posted: Nov 1, 2010 By: MyAccountantOnline Member since: Sep 24, 2008
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  6. Philio

    Philio UKBF Newcomer Free Member

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    Sage expects the returns I've created to be linked to payments, which obviously again I cannot do as there are no matching payments, should I just leave them unpaid in this situation? (I've added the other payments in and given the correct VAT liability code.)
     
    Posted: Nov 1, 2010 By: Philio Member since: Nov 1, 2010
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  7. jimmyjames

    jimmyjames UKBF Newcomer Free Member

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    I took over a small business 4years ago that was already registered for VAT, so I registered without really thinking much different.
    My accountant is now saying that maybe I shouldn't be registered at all. If this is the case can I claim any of the VAT I have already paid over the 4 years?
     
    Posted: Nov 1, 2010 By: jimmyjames Member since: Nov 1, 2010
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  8. Philio

    Philio UKBF Newcomer Free Member

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    Any VAT you paid (or previous owner paid) would have been charged to your clients, likewise you would have reclaimed any VAT on payments you made. If the business doesn't make over 56k or whatever the threshold is these days and you have more coming in than going out it's not always worth being VAT registered. You cannot claim back what you paid, as technically you didn't pay any VAT, your clients did.
     
    Posted: Nov 1, 2010 By: Philio Member since: Nov 1, 2010
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  9. jimmyjames

    jimmyjames UKBF Newcomer Free Member

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    My business is selling second hand clothes so the VAT is not shown added to the price as such. I have paid VAT on my 50% commission profit.
     
    Last edited: Nov 1, 2010
    Posted: Nov 1, 2010 By: jimmyjames Member since: Nov 1, 2010
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  10. David Griffiths

    David Griffiths UKBF Legend Full Member - Verified Business

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    No. In a word
     
    Posted: Nov 1, 2010 By: David Griffiths Member since: Jun 21, 2008
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