Our latest hints and tips covers Sage 50 VAT posting errors.
The largest number of processing queries I help with concern correcting a VAT posting error. Provided the original entries are correctly split between ‘net’ and ‘VAT’ the tax code assigned should ensure the values are included in the correct boxes on the VAT return.
The three most common VAT posting errors are:
Wrong tax code assigned
An entry has been amended after it had been included on a VAT return.
Late booked entries not included on VAT return
These simple steps can be applied to avoid there errors. Or at least you will catch them early to avoid detailed research.
Ensure the VAT journal has been entered each time you complete a return. Then move the return values from output tax (NC220) and input tax (NC2201) to liability (NC2202).
Any late booked entries will appear in the audit trail after this journal.
If an item on the return is subsequently amended, the balance on NC2200 or NC2201 will no longer be zero at the point the journal was entered, helping you to home in on the error.
Regularly run the VAT return without reconciling
Compare box 1 value with NC2200, they should be the same
Compare box 4 value with NC2201, they should be the same (if you have an entry in box 2 deduct the value from box 4 first)
A difference here suggests a transaction has VAT but assigned an inactive tax code. Run an activity report on NC2200 or NC2201 and review the tax codes.
When you run the VAT return always answer “Include” when prompted. There are earlier unreconciled transactions, these are late booked items.
Tip: Where VAT has been entered by journal, Sage enters credits in box 1 and debits in box 4, irrespective of whether the underlying transaction is output or input; this is usually easy to spot because both accounts will vary from the return by an equal and opposite amount; to correct enter a journal between NC2200 ans NC2201 to offset