Check your VAT settings

To ensure you can calculate and submit your VAT Returns correctly, you must enter your VAT settings. This includes settings such as your VAT Registration number, which VAT scheme you're using and whether or not you submit under Making Tax Digital.

Check your tax codes

The VAT Return is calculated based on the tax codes you use when posting your transactions. We recommend you double-check the following:

• You're using the correct tax codes on the transactions you post, and
• If you've added or amended tax code settings, that they are all correct

The following guides can help you with this:

• Tax codes to use for popular goods and services
• Which tax code should I use? - from 1 January 2021 (UK only)
• Default tax codes and how they affect your VAT Return - UK
• Correcting tax codes on transactions
• Check if a tax code is included on the VAT Return

Reconcile previous VAT periods

As you haven't reconciled previous VAT periods, you must do this before you submit your first VAT Return from within your software. This ensures that old transactions you've already accounted for aren't included again in your next VAT Return.

1. Take a backup of your data.
2. Click VAT, click VAT Return then click Use custom date range.
3. In From enter 01/01/1980, then in To enter the last day of the last VAT period you're accounting for outside of Sage 50 Accounts.
4. Click Calculate VAT Return.
5. If an Earlier unreconciled transactions window appears, click Include.
6. Click Reconcile VAT Return, then click Yes.
7. Select the Mark as submitted check box then click Close.

Going forward, these old transactions will not be included when you calculate your VAT. It's important that these transactions have been accounted for in previous VAT Returns and we recommend you speak to your accountant about checking that this is the case.

If you find any transactions that haven't been accounted for in the previous VAT period, you can enter them as adjustments when you run your first VAT Return.

To print a list of these transactions at any time, click VAT, double-click the VAT Return for the previous VAT period then click Print.

Your first VAT Return

When you calculate your first VAT Return within your software, it may show transactions dated in the previous period which were entered after you reconciled that period.

We recommend you check these transactions in case any were already accounted for in your previous VAT Return. If required, you can enter VAT Return adjustments to remove the values of any transactions already accounted for.

For help with running your first VAT Return within your software, we recommend you take a look at one of our VAT scheme guides.