VAT Recons: Why they are essential!

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This article serves as a reminder to do your VAT Turnover Reconciliation before submission of the last vat return.

The VAT turnover reconciliation aims to reconcile turnover as per the Annual Financial Statements (AFS) to the total output tax declared over the same period as per the VAT201’s (monthly VAT returns). The reconciliation can be used as a reasonability test to ensure that there are no major variances between the VAT 201’s and the AFS.

The information contained in VAT vendor’s general ledger, the input tax and output tax accounts are used to compile the VAT returns. There is an obligation on the vendor to ensure that the turnover per the VAT returns is accurate by reconciling it to the revenue as reflected in the general ledger.

Vendors should therefore include all supplies, including standard rated, zero-rated, exempt and non-supplies in the VAT return. Any differences should be followed up and rectified before the VAT return is submitted to SARS.

We suggest to clients to perform a Specific Review and Reconciliation of the VAT Returns prior to the submission of the February VAT 201 return.

Should you be interested in us performing this for you then please contact us as soon as possible so that we can schedule the time. Remember that we will only have a few weeks in which to perform this function, between 1 March and 25 March, (for all clients that request it) so our availability will be under pressure.

This article is a general information sheet and should not be used or relied upon as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice. Errors and omissions excepted (E&OE)