Complete your VAT Reconciliation report after you start with VAT

Learn how to complete your VAT Reconciliation when you're a new organisation, or you've recently registered for VAT after using Xero for a while. We'll use an example to show how it works.

Before you start, learn how Xero builds the VAT Reconciliation report, and where the figures come from.

If your organisation has moved to Xero from another accounting system, and you have a VAT amount in your conversion balances, follow the process for completing the VAT Reconciliation report with a conversion balance instead.

Example scenario

  • You start a new business on 1 May 2016. You use Xero from that date.
  • You are registered for VAT with HMRC on the accruals basis.
  • Your organisation lodges a VAT Return every quarter. Your first VAT Return will be for the quarter ended 30 June 2016.

Follow these 4 steps to understand how the reconciliation works.

  1. Complete your first VAT Return in Xero
  2. Run the VAT Reconciliation report
  3. Complete your second VAT Return in Xero
  4. Update the VAT Reconciliation report