Review sections of the VAT Reconciliation report

Review each section of the VAT Reconciliation report for standard VAT. This is a check to make sure transactions are correctly accounted for in the VAT Return.

VAT Collected and VAT Paid

Review these sections to see if you have any unfiled amounts to include on your next VAT Return.

Figures manually entered in the Adjustments and Filed fields are not saved on the report.

VAT Collected

Image showing VAT Collected section of report.

  • Opening Balance – The amount of VAT collected which is outstanding as at the From date of this report.
  • VAT Collected – Total VAT collected on transactions dated in the period where the tax rate has a tax type of 'Sales'.
  • Adjustments – If you filed a different VAT Collected amount with HMRC from the published amount on your VAT Return, enter the difference here.

    Ensure adjustments are entered into Xero. Talk to your adviser so you enter it correctly.

  • Filed – The total VAT due figure from box 3 on your published VAT Return. If you haven't published your VAT Return for the period, this field will be blank.
  • Unfiled – A running total of opening unfiled VAT collected + VAT collected - filed VAT collected.

VAT Paid

Image showing VAT paid section of report.

  • Opening Balance – The amount of VAT paid which is outstanding as at the From date of this report.
  • VAT Paid – Total VAT paid on purchases and expenses dated in the period where the tax rate has a tax type of 'Purchases'.
  • VAT on Imports – VAT on transactions dated in the period where the tax rate is VAT on Imports. This amount is also included in the VAT Paid amount for this period.
  • Adjustments – If you filed a different VAT Paid amount with HMRC from the published amount on your VAT Return, enter the difference here.

    Ensure adjustments are entered into Xero. Talk to your adviser so you enter it correctly.

  • Filed – The VAT reclaimed figure from box 4 on your published VAT Return. If you haven't published your VAT Return for the period, this field will be blank.
  • Unfiled – A running total of opening unfiled VAT paid + VAT paid - filed VAT paid.

If you have Reverse Charges transactions in the period you may need to make adjustments in this section.

VAT Account Transactions

Image showing VAT Account transactions for period.

Review transactions you've coded directly to your VAT account for the report period. If you're using Xero's default chart of accounts, the VAT account is 820 – VAT.

Transactions you might see in this section:

  • Your VAT conversion balance
  • A trial balance adjustment (if you entered comparative balances with your conversion balance)
  • Import purchases using the tax rate 'VAT on Imports'
  • VAT payments to and refunds from HMRC
  • Manual journals and transaction lines coded to the VAT account

VAT Owing

Image showing VAT owing on report.

Compare the VAT amounts on your published VAT Returns to VAT paid to, or refunded from, HMRC in the VAT account. The closing balance shows VAT payable to, or refundable from, HMRC for the period.

  • Opening Balance - The sum of all Filed amounts for periods before the From date of the report.
  • VAT Collected and Filed – Total of the Filed column in the VAT Collected section of this report.
  • VAT Paid and Filed – Total of the Filed column in the VAT Paid section of this report.
  • Payments Made – The total of the VAT Account Transactions section less the total VAT on Imports in the VAT Paid section.

VAT Account Summary (accruals scheme)

Image showing account summary on accrual basis.

If your organisation uses the accruals basis for VAT, the VAT Account Summary breaks down VAT outstanding on the accruals basis at the To date of the reconciliation. The VAT Account Summary balance should match your VAT Account Balance.

  • VAT Owing – The net value of VAT filed amounts not yet paid to or refunded from HMRD, displayed in the VAT Owing section of the report.
  • Unfiled VAT – The net value of unfiled VAT totals in the VAT Collected and VAT Paid section of the report.

VAT Account Summary (cash scheme)

Image showing account summary on cash basis.

If your organisation uses the cash scheme for VAT, the VAT Account Summary breaks down VAT outstanding at the end of the reconciliation period so you can reconcile it to the accruals-basis VAT Account Balance. The VAT Account Summary balance should match the VAT Account Balance.

  • VAT Owing – The net value of VAT filed amounts not yet paid to or refunded from HMRC, displayed in the VAT Owing section of the report.
  • VAT in Accounts Receivable – The VAT component of approved invoices awaiting payment at the To date of this report.

    View a breakdown of this figure on the Aged Receivables Summary report run as at the To date of the VAT Reconciliation report. In Report Settings, select Outstanding VAT.

  • VAT in Accounts Payable – The VAT component of approved bills awaiting payment at the To date of this report.

    View a breakdown of this figure on the Aged Payables Summary report run as at the To date of the VAT Reconciliation report. In Report Settings, select Outstanding VAT.

  • VAT in Expense Claims – The VAT component of approved expense claims waiting to be paid at the To date of this report.

    View a breakdown of this figure on the Aged Payables Summary report.

  • Unfiled VAT – The net value of unfiled VAT totals in the VAT Collected and VAT Paid section of the report.