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The VAT turnover reconciliation reconciles turnover recorded in the profit and loss account to Box 6 (net outputs/sales) on the VAT returns for the same periods, and helps explain any difference between the two. It reads its period structure and Box 6 figures from whichever of the Summary of VAT returns - BS rec or the VAT closing balance reconciliation is currently in use, so it should be added alongside one of those two templates rather than on its own.

Table of contents 

When should I use this template?

Use this wherever the company is VAT-registered and turnover needs to be reconciled to the VAT returns as a working paper check. Typically that means alongside whichever of the Summary of VAT returns - BS rec or VAT closing balance reconciliation is starred in the file, since this template is built to read its period figures from that one.

Before you start

  • Add the Summary of VAT returns - BS rec or the VAT closing balance reconciliation to the file first. A warning appears on this template if neither is present, since it has nothing to reconcile against without one of them.
  • Check which of the two is actually feeding this template: the VAT closing balance reconciliation is used by default, and the Summary of VAT returns - BS rec only takes over if it is the one starred, or if the VAT closing balance reconciliation is not present in the file at all. A warning appears if both templates are starred at once, asking you to star one only.
  • Know which nominal codes hold turnover. The template defaults to a mapped sales/turnover range, but this can be overridden.

Background

Turnover shown in the profit and loss account is drawn from the general ledger, while Box 6 on the VAT return is a statutory figure with its own inclusions and exclusions (for example accrued or deferred income, work in progress, or proceeds on the sale of a fixed asset may sit in one but not the other, or vice versa). This template reconciles the two so any genuine difference is identified and explained, rather than left unaddressed.

Steps

Step 1: Pull in the turnover accounts

Use the nominal code selector to bring in the turnover accounts for the period (defaults to a mapped sales range). The template totals their combined value as Turnover per accounts.

Step 2: Review the Box 6 comparison

The Box 6 figure for each period is populated automatically, either from the Sales column on the Summary of VAT returns - BS rec, or from the equivalent per-period Sales figure on the VAT closing balance reconciliation, depending on which one is feeding this template (see the info message shown at the top of the template). Each period can have its own supporting attachment. If the combined Box 6 total already agrees with turnover per accounts, a reconciled tick appears next to the total; if there is a difference, the breakdown in Step 3 appears instead so it can be explained.

Step 3: Explain any difference

Once a difference exists between turnover per accounts and Box 6, a set of adjustment lines appears to build up to an Adjusted turnover figure: opening and closing accrued income, opening and closing deferred income, opening and closing work in progress, and proceeds from the sale of fixed assets. If either VAT template is on the cash accounting scheme, opening and closing trade debtors are included as well. Adjusted turnover is then compared to turnover per the VAT returns, and two further sections let you explain what is left: turnover included on the VAT returns that has not yet been processed in the bookkeeping system, and turnover in the bookkeeping that has not yet made it onto a VAT return.

Step 4: Review the remaining difference

After the adjustments and explanations in Step 3, any remaining difference is shown both as an amount and as a percentage of turnover per the VAT returns. If a difference is still outstanding, a further explanation section appears where you can describe and value each remaining item, down to a Difference after explanation figure with its own reconciled/unreconciled indicator.

What flows through to the rest of the accounts/workflow?

This template does not feed any other template. It is a standalone check that turnover recognised in the accounts reconciles to what has been declared to HMRC on the VAT returns, supporting the turnover figure in the profit and loss account.

What rolls forward next year?

Nothing is entered directly other than the turnover account selection, which is remembered per file. All period figures, adjustments and explanations relate to the current file's periods and are recalculated or re-entered each year from the Summary of VAT returns - BS rec or VAT closing balance reconciliation.

Where the data comes from

Turnover per accounts comes from the selected nominal codes in the trial balance. The Box 6 figures and the period structure are read entirely from whichever of the Summary of VAT returns - BS rec or the VAT closing balance reconciliation is currently feeding this template, so this template performs no independent VAT-return data entry of its own. The accrued/deferred income, work in progress, fixed asset proceeds, trade debtors adjustments and explanation rows are entered manually to account for any difference.

Frequently asked questions

Why is there a warning that the Summary of VAT returns - BS rec is missing?

This template needs either the Summary of VAT returns - BS rec or the VAT closing balance reconciliation in the file to have anything to reconcile against. Add one of the two.

Which template feeds this one, Summary of VAT returns - BS rec or VAT closing balance reconciliation?

Whichever one is starred, with the VAT closing balance reconciliation used by default if neither is starred. If only the Summary of VAT returns - BS rec is present, that one is used instead.

Why did extra rows appear that I do not remember seeing on this template before?

The accrued income, deferred income, work in progress, fixed asset proceeds and trade debtors adjustment rows only appear once there is a difference to explain between turnover per accounts and turnover per the VAT returns. If the two already agree, none of these rows are shown.

Why is my template showing as unreconciled?

There is a remaining difference between adjusted turnover and turnover per the VAT returns after all adjustments. Enter an explanation and value for the remaining amount in the final explanation section.