VAT Returns

Who will need to submit VAT returns?

Company registered with VAT are required to submit VAT returns to HM Revenue and Customs on quarterly basis.

HM Revenue and Customs will issue a VAT number to the company and this number is to be printed on the company stationery especially on sales invoices. It is recommended to issue sales invoices in sequential numbers.

The company are to charge output tax on sales. Concurently, its could claim input tax on purchases receipts with VAT number printed. 

What are needed for VAT preparations?

It is advisable for companies with large volume of transactions to use Sage software to maintain its accounting records for quarterly VAT purposes and also year end accounts. It is recommended to set up a proper filing system for easy access and for VAT inspections. 

HM Revenue and Customs compares Sales per quarterly VAT returns to sales per statutory accounts submitted together with the Corporation tax returns 12 months after the company financial year in question. Their aim is to ensure that no output VAT on sales is unpaid and/or outstanding and all input VAT claimed are legitimate business expenses.

HM Revenue and Customs will send you a letter to query should they have any doubt on your VAT returns when comparing to the statutory accounts. They also carry out random VAT inspections to VAT registered businesses.

Why the sales per VAT quarterly returns are differ from sales figure reported in the statutory accounts?

Companies opted to prepare its VAT returns under Cash accounting scheme would have the difference because the sage software compute only sales that already been paid whereas the statutory accounts are prepared on accruals basis.

In other words, sales figure per statutory accounts are per sales invoices issued for the financial year regardless whether its have been received. Sage could generate a report for the outstanding debt at the financial year end. This report called called Aged debtors report. The balance per this report represent Trade Debtors in the Balance Sheet.

Using the incorrect VAT tax code T9 in posting sales and purchases transactions. T9 is for non-vatable transactions such as bank charges, salaries and wages and so on.Thus, transactions posted to Sage with tax code T9 will not be reflected in the VAT returns on Sage.

How to ensure Sage software compute the VAT returns correctly?

Sage Accounts 2008 is the best software for VAT returns preparations. It is easy to use and can be obtained at reasonable price. However, there is some basic knowledge of VAT tax codes the user of the software should be aware of when posting transactions in order for Sage to generate correct VAT returns.

Please ensure correct VAT Tax codes are used when posting transactions to Sage so that figures are correctly computed and presented in the VAT returns (on Sage).

Sage 50 Accounts 2008 software come with a comprehensive set of VAT tax codes set up by defaults when you install the program and will not normally require to change any tax codes settings. However, an option to change is still available.

Below is the VAT tax codes set-up by default in Sage Accounts 2008 software:

Please feel free to email us should you have any questions about Sage Accounts 2008 or would like to share your experiences on Sage with us.