| | UK VAT Cash Accounting scheme |
| Description | Many businesses using Sage Accounts are VAT registered which means that each month or quarter they must produce and reconcile their VAT Return. For further information about VAT, refer to the HM Revenue & Customs (HMRC) website at www.hmrc.gov.uk |
| Resolution | The VAT ReturnIf you haven't already started your VAT Return, you can find out everything you need to know in our Help Centre. How the VAT Return calculatesSage 50 Accounts calculates the VAT Return based on your VAT scheme. When using the VAT Cash Accounting Scheme your return is calculated based on the following VAT elements: - Bank, cash and visa receipts and Payments
- Journal entries posted with an appropriate tax code
- The value of any discounts
The following table explains how each Box is calculated on the VAT Return: | Box | Details | Tax code included | Transactions included | | 1 | VAT on your sales | T1, T2, T3, T5, T15, T17, T18, T20, T21, T24, T25, T26 | SR, SA, BR, CR, VR, SP, JC. If you use Foreign Trader revaluation postings, or CIS reverse charge postings then SI and SC transactions are also included | | 2 | VAT on any EC acquisitions | T8 | PI, PC, BP, CP, VP, PR, JD | | 3 | Total VAT due, therefore the total of boxes 1 and 2 | N/A | N/A | | 4 | Total VAT on your purchases | T0, T1, T2, T3, T5, T8, T15, T17, T18, T20, T24, T25 | PP, PA, BP, CP, VP, PR, JD. If you use Foreign Trader revaluation postings, or CIS reverse charge postings then PI and PC transactions are also included | | 5 | Net amount of VAT to be paid to HMRC or reclaimed by you | N/A | N/A | | 6 | Value of your sales excluding VAT | T0, T1, T2, T3, T4, T5, T15, T20, T21, T22, T23, T24, T25, T26 | SR, SA, BR, CR, VR, SP, SD, JC. If you use Foreign Trader revaluation postings, or CIS reverse charge postings then SI and SC transactions are also included | | 7 | Value of your purchases excluding VAT | T0, T1, T2, T3, T5, T7, T8, T14, T15, T16, T17, T18, T19, T20, T21, T23, T24, T25, T26 | PP, PA, BP, CP, VP, PR, PD, JD. If you use Foreign Trader revaluation postings, or CIS reverse charge postings then PI and PC transactions are also included | | 8 | Value of your EC sales excluding VAT | T4 | SI, SC, BR, CR, VR, JC | | 9 | Value of your EC purchases excluding VAT | T7, T8 | PI, PC, BP, CP, VP, JD |
 TIP: Need more help on transaction types, view our guide. Confirm the figures on the VAT ReturnOnce you have calculated your VAT Return, you can click the value you would like to see a breakdown of. If you'd like to see the included transaction then double-click the value. You can then use the reports to confirm the figures in each of the boxes on the VAT Return. Click the relevant box below to see which reports you need to run to confirm the values are correct.  NOTE: All of the reports are in Reconciliation reports > Reconciliation reports > VAT cash scheme.
Box 1The figure in Box 1 should agree with:
| The VAT element of the transactions on the Day Books: Customer Receipts (Detailed) report | | Plus | The VAT element of the transactions on the Day Books: Bank Receipts (Detailed) report | | Plus | The VAT element of the transactions on the Day Books: Cash Receipts (Detailed) report | | Plus | The VAT element of the transactions on the Day Books: Credit Card Receipts (Detailed) report | | Plus | The value of any journal credits posted to the Sales or Purchase Tax Control Accounts with a vatable tax code You can check which journals are posted to these control accounts by running the Day Books: Nominal Ledger report | | Plus | The VAT value of T20 reverse charge invoices and T24 invoices when they are linked to T1 There is no standard report to show these values, we recommend you click on the T20 and T24 boxes on the VAT Return to check the transactions. If you want to create a report to show these values, we recommend you use the T9 Transaction Listing report and amend it to show the T20 and T24 transactions. For more information about how to amend this report, please contact Sage Technical Support | | Less | The VAT element of the transactions on the Day Books: Customer Payments (Summary) report NOTE: If you have recently changed VAT schemes from Standard VAT, this report may show transactions which use the Standard VAT tax codes if you have refunded an invoice from the Standard VAT scheme. These transactions won't be included in your VAT Return if you are using new tax codes for VAT Cash Accounting. To find this report, Bank accounts > Reports >Customer receipts and payments |
Why the figures would not agree- Manual adjustments may have been made, to view or amend manual adjustments, from the VAT Return window click the Adjustments button
- Different date ranges have been specified when calculating the VAT Return and running the day books reports
- One or more of the bank accounts have been excluded from the day books reports
- A VAT element has been entered onto a sales transaction, whose tax code is not included in the VAT Return
- Unreconciled transactions from before the specified VAT period have been included in the VAT Return but they are not included in the day books reports
Box 2The figure in Box 2 is the notional VAT calculated on T8 transactions when T8 is linked to T1. This figure should be 20% of the value of your T8 transactions. If you want a report to show these transactions with the notional VAT calculated, please contact us. This is the sum of Box 1 plus Box 2. The figure in Box 4 should agree with:
| The VAT element of the transactions on the Day Books: Supplier Payments (Detailed) report | | Plus | The VAT element of the transactions on the Day Books: Bank Payments (Detailed) report | | Plus | The VAT element of the transactions on the Day Books: Cash Payments (Detailed) report | | Plus | The VAT element of the transactions on the Day Books: Credit Card Payments (Detailed) report | | Plus | The value of any journal debits posted to the Sales or Purchase Tax Control Accounts with a vatable tax code You can check which journals are posted to these control accounts by running the Day Books: Nominal Ledger report | | Plus | The VAT value of T20 reverse charge invoices and T8 invoices when they are linked to T1 There is no standard report to show these values, we recommend you click on the T20 and T8 boxes on the VAT Return to check the transactions. If you want to create a report to show these values, we recommend you use the T9 Transaction Listing report and amend it to show the T20 and T8 transactions. For more information about how to amend this report, please contact Sage Technical Support | | Less | The VAT element of the transactions on the Day Books: Supplier Receipts (Summary) report NOTE: If you have recently changed VAT schemes from Standard VAT, this report may show transactions which use the Standard VAT tax codes if you have refunded an invoice from the Standard VAT scheme. These transactions won't be included in your VAT Return if you are using new tax codes for VAT Cash Accounting. To find this report, Bank accounts > Reports > Supplier payments and receipts |
Why the figures would not agree- Manual adjustments may have been made, to view or amend manual adjustments, from the VAT Return window click the Adjustments button
- Different date ranges have been specified when calculating the VAT Return and the day books reports
- One or more of the bank accounts have been excluded from the day books reports
- Notional VAT has been manually added to T8 transactions and included in Box 4
- A VAT element has been entered onto a purchase transaction, whose tax code is not included in the VAT Return
- Unreconciled transactions from before the specified VAT period have been included in the VAT Return, but they are not included in the day books reports
This is the figure in Box 3 less the figure in Box 4. The figure in Box 6 is the total net value of sales and should agree with:
| The net element of the transactions on the Day Books: Customer Receipts (Detailed) report. NOTE: If you post any invoices with EC sales tax codes, T4, T20 and T22, to avoid picking up these values twice you must exclude transactions with these tax codes from this total. To do this, you can edit the report to exclude these transactions. For help editing the report, please contact support. Alternatively, if there's only a handful of transactions, you could calculate the value manually or use Excel. | | Less | The net element of the transactions for goods on the VAT > OSS IOSS transactions > Non-union OSS Transactions (Detailed) report
You must add the Net total for each tax code used for goods to get the full Net element NOTE: If this value is negative, you should add it instead. | | Less | The net element of the transactions for services on the VAT > OSS IOSS transactions > IOSS Transactions (Detailed) report
You must add the Net total for each tax code used for services to get the full Net element NOTE: If this value is negative, you should add it instead. | | Plus | The net element of the transactions on the Day Books: Bank Receipts (Detailed) report | | Plus | The net element of the transactions on the Day Books: Cash Receipts (Detailed) report | | Plus | The net element of the transactions on the Day Books: Credit Card Receipts (Detailed) report | | Plus | The value of any journal credits posted to nominal codes other than the Sales or Purchase Tax Control Accounts, with a vatable tax code | | Plus | The gross value of the transactions on the Day Books: Customer Discounts (Detailed) report | | Plus | The net value of any sales invoices posted with an EC sales tax code, T4, T20 and T22 The net value of the T4, T20 and T22 sales invoices on the Tax Analysis (By Invoices & Credits) report | | Less | The net value of any sales credits posted with an EC sales tax code, T4, T20 and T22 The net value of the T4, T20 and T22 sales credits on the Tax Analysis (By Invoices & Credits) report | | Plus | The net value of any purchase invoices posted with an EC purchases tax code T23 and T24 The net value of the T23 and T24 purchase invoices on the Tax Analysis (By Invoices & Credits) report | | Less | The net value of any purchase credits posted with an EC purchases tax code T23 and T24. The net value of the T23 and T24 purchase credits on the Tax Analysis (By Invoices & Credits) report. | | Less | The net element of any customer payments for the specified period The net value on the Day Books: Customer Payments (Summary) report |
Why the figures would not agree- Manual adjustments may have been made, to view or amend manual adjustments, from the VAT Return window click the Adjustments button
- Transactions on the reports have tax codes that are not included on the VAT Return. For example, transactions on T9
- One or more of the bank accounts have been excluded from the day books reports
- Inconsistent date ranges have been used
- Unreconciled transactions from before the specified VAT period have been included in the VAT Return, but they are not included in the day books reports
Box 7The figure in Box 7 is the total net value of purchases and should agree with:
| The net element of the transactions on the Day Books: Supplier Payments (Detailed) report NOTE: If you post any invoices with EC sales tax codes, T7, T8, T23 and T24 or the reverse charge code, T20, to avoid picking up these values twice you must exclude transactions with these tax codes from this total. To do this, you can edit the report to exclude these transactions. For help editing the report, please contact support. Alternatively, if there's only a handful of transactions, you could calculate the value manually or use Excel. | | Plus | The net element of the transactions on the Day Books: Bank Payments (Detailed) report | | Plus | The net element of the transactions on the Day Books: Cash Payments (Detailed) report | | Plus | The net element of the transactions on the Day Books: Credit Card Payments (Detailed) report | | Plus | The value of any journal debits posted to nominal codes, other than the Sales or Purchase Tax Control Accounts, with a vatable tax code | | Plus | The net element of the transactions on the Daybooks: Supplier Discounts (Detailed) report To find this report, Suppliers > Reports > Day books | | Plus | The net value of any purchase invoices posted with an EC purchases tax code, T7, T8, T20, T23 and T24 | | Less | The net value of any purchase credits posted with an EC purchases tax code, T7, T8, T20, T23 and T24 | | Less | The net element of any supplier receipts for the specified period |
*You should exclude the net value of any T9 transactions. Why the figures would not agree- Manual adjustments may have been made, to view or amend manual adjustments, from the VAT Return window click the Adjustments button
- Transactions on the reports have tax codes that are not included on the VAT Return. For example, transactions on T9
- Inconsistent date ranges have been used
- Unreconciled transactions from before the specified VAT period have been included in the VAT Return, but they are not included in the day books reports
Box 8The figure in Box 8 is the net element of all customer invoices less credits, bank cash and visa receipts and journal credits posted with a T4 tax code, within the specified date range, plus any Union OSS transactions for goods.
| The net element of all customer invoices less credits, bank cash and visa receipts and journal credits posted with a T4 tax code, within the specified date range | | Plus | The net element of the transactions for goods on the VAT > OSS IOSS transactions > Union OSS Transactions (Detailed) report
You must add the Net total for each tax code used for goods to get the full Net element
NOTE: If this value was negative, you should subtract it instead. Why the figures would not agree- On VAT Cash Accounting the VAT Return picks up sales invoices (SI) and sales credits (SC), however this reports only shows the sales receipts (SR) and sale payments (SP). Therefore, if the SI/SC and SR/SP, are in different VAT periods, this may cause a difference when reconciling
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The figure in Box 9 is the net element of all purchase invoices less credits, bank cash and visa payments, and journal debits posted with a T8 tax code, within the specified date range NOTE: If you would like a report to display these transactions, please contact us.
FAQsSee what you've been asking us. Read more > How do I view the reconciliation status of a transaction?Locate the transaction in Transactions then check the VAT column. | R | This indicates that the transaction is reconciled | | N | This indicates that the transaction is unreconciled | | - | This indicates that it is a non-vatable transaction, for example, a sales invoice, posted using the default non-vatable tax code T9 |
What is the difference between zero rated and exempt items?Zero rated items are goods on which the Government charge VAT but the rate is currently set to zero. The goods covered by this classification are items such as children's clothes and footwear, water, basic foods, books and newspapers. Exempt items are goods on which no VAT is paid or charged, but which still need to be recorded on the VAT Return. The goods covered by this classification are items such as land, postal services, health services, betting and gaming.
I forgot to reconcile my last VAT Return. What should I do?If you did not reconcile the transactions on your previous VAT Return, the next time that you calculate your VAT Return a message appears informing you that Sage Accounts has found a number of unreconciled transactions from before the specified period. If these transactions relate to a previously unreconciled VAT Return: - Calculate the VAT Return from the previous period, then check it against the VAT Return that you submitted to HMRC.
- If the figures are the same, you can reconcile the transactions and proceed with your current VAT Return.
- If the figures are different, this may be due to the following:
- Transactions from the previous period that you have not chosen to include in the calculation. For example, if your current period is quarter 4, and you forgot to reconcile quarter 3. These transactions may be late entries from quarter 2. In this case, you can recalculate the VAT Return including these figures. If the totals then match, you can reconcile the transactions
- Transactions from the current period that were posted after you completed the VAT Return, but are dated in the previous period. For example, if your current period is quarter 4, and you forgot to reconcile quarter 3, these transactions may have been posted after you completed the quarter 3 VAT Return using a quarter 3 date
If you don't know which transactions are causing the differences, you must calculate the VAT Return for both VAT periods then deduct the figures from the previous VAT period. The resulting figures are the values for the current VAT period
Why do discounts appear on my VAT Return?Discounts now appear on the VAT return as in some instances the online submissions were rejected if the VAT was greater than the net multiplied by the standard rate of VAT. HMRC advised that we should show the full net amount not the net amount after the discount.
Why do invoices appear on my VAT Return when I use EC tax codes?EC transactions are excluded from the VAT Cash Accounting scheme and must therefore be accounted for on an invoice basis.
Why do T9 transactions appear on the VAT Report (detailed) report?If your T9 transactions appear on your VAT Report (detailed) report, the tax code T9 may have been flagged to be included on the VAT Return or it may be a discount transaction. You can amend the T9 tax code in the tax code configuration. - Settings > Configuration > Yes to close all other open windows > Tax Codes.
- From the list of tax codes, select tax code T9 > Edit.
- Clear the Include in VAT Return check box > OK.
- Apply > Close and when prompted to save your changes > No.
I have reconciled a VAT Return in error. Can I undo this?No, it isn't possible to undo a VAT reconciliation. To correct this you need to restore a backup taken before the VAT Return was reconciled.
How do I change the non-vatable tax code?- Settings > Company Preferences > Yes to close all other open windows > VAT.
- From the Non-Vatable Tax Code drop-down list select the required tax code > OK.
How do I know what VAT period to use?When you register for VAT HMRC advise you of the VAT periods you will submit for. If you submit quarterly your VAT period falls into one of the following staggers: - March - June - September - December
- April - July - October - January
- May - August - November - February
If necessary, you can apply to have your VAT period end pattern changed to a different pattern, or request to submit monthly or annual VAT Returns. For further information regarding VAT periods please refer to HMRC.
I am not yet ready to run the year end. Can I still reconcile my VAT Return?Yes, you can reconcile your VAT Return before running the Year End option. Reconciling your VAT Return within Sage Accounts does not remove any transactions, therefore all balances are still correct.
Why is the figure in Box 1 or Box 4 is not 20% of the figure in Box 6 or Box 7?The figure in Box 1 or Box 4 is not 20% of the figure in Box 6 or Box 7 when transactions are included in Box 6 or Box 7 that do not have VAT at 20%, for example: - You have posted transactions using a lower rated tax code, such as T5 at 5%
- You have posted transactions with a tax code that has a 0% VAT rate but is included in the VAT Return, such as T0 and T2
- You have posted EC sale of goods and related cost transactions using the T4 tax code. These transactions are included in Box 6, but do not have 20% VAT recorded in Box 1
- You have posted EC purchase transactions using the T7 tax code. These transactions are included in Box 7, but do not have 20% VAT recorded in Box 4
- You have posted journals that are included in Box 1 or Box 4 and Box 6 or Box 7, but the journal in Box 1 or Box 4 is not 20% of the journal in Box 6 or Box 7
- You have posted a manual adjustment to Box 1 Box 4, Box 6 or Box 7
How do I view the earlier unreconciled transactions?When you click Calculate VAT Return, a list of the earlier unreconciled transactions appears. To print this list, click Print. You can also print the list of these transactions from the Reconcile VAT Return window, click Print VAT Return and select Earlier unreconciled transactions.
How does OSS/IOSS affect my VAT Return?How your VAT Return is affected depends on the reporting type and whether the transaction includes goods or services.
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