Xero software & VAT returns

[jnbina]

Hi everyone,

The accountant has asked me why at the year end the VAT Nominal account has £986.05 left in it.

I'm a trained bookkeeper and have looked at the VAT returns and the Nominal account. It differs at each VAT return. ie
March Filed 4,733.08 March N/C 5,150.34 difference 417.26

As late claims could affect this I've done vat report upto date and compared the N/c upto date .. ..
30th June 2014 Vat return 5210.71 30th June 2014 N/C 5799.02 difference 588.31
Surely these should match?.

I've looked at the rules on Xero to ensure I'm doing the VAT returns correctly.

1. Running the report with LATE CLAIMS box ticked.
2. File the VAT within the XERO system (so nothing can be changed)
3. File the VAT return with HMRC via thier web site.

I've never used the VAT reconciliation and when I run a report for March above, the summary box tells me
VAT owing £31k, Unfiled VAT £14k Balance as at 31st March £17k
I'm really lost on how to translate this into something meaningful, even thought I've read the xero pages on VAT and these reports.

Can anyone help with
1. Am I completing the Xero VAT report correctly
2. Should I use the VAT reconcilliation Report and how to read this/understand it
3. What else should I look at to find why the Nominal account and the VAT returns are not matching?

Many Thanks

JN

 

[David Griffiths]

Is Xero set up to report VAT on the cash basis or the accrual basis?

If it's on the cash basis the VAT account will always have a balance equivalent to the output VAT on debtors less the input VAT on creditors.

 

[jnbina]

Hi David

Thanks for your reply.

Its Accrual basis.

 

[Mike Conroy]

did you set xero up half way through an accounting period? If so you have to run the earlier VAT returns obvoiusley just dont send to HMRC. normally this is done on conversion.

 

[jnbina]

Hi Mike
Xero was set up at the beginning of the year with the TB the accountant gave.

 

[Mike Conroy]

please send a step by step on how you set xero up. i think you have done something wrong on the conversion process.did the trial balance match exactly after you put all the figures into xero on conversion.

 

[jnbina]

Hi Mike

Thanks for your help.

The Trial Balance from the Accountant had the VAT o/b at £22,310.66 CR . I used this as the XERO o/b and have just double checked again and it's still at £22310.66 CR on the conversion balance page.

The O/B Creditors / Debitors invoices were put on without VAT. (as this was accounted for in the VAT O/B figure).

The TB and the O/B conversions were adjusted to match as the bank from sage had cheques which hadn't actually cleared the bank prior to the year end conversion. Hence the creditors and the bank were adjusted to take this into account. Creditors the accountant gave of £107,775.29 was increased by the uncleared cheques of £4,359.58 to £112,134.87. Bank balance was reduced to take this £4,359.58 into account also. Hence the bank o/bal matched on Xero and on the bank statements.

Kind Regards

JN

 

[Mike Conroy]

ok what i would do is run the check my books addon which is free the first 3 times you use it this may show any errors that have been made.