Completing a Standard VAT Return on Sage

Following the previous post, for those using Sage, the process is greatly automated, provided that you have used the correct Sage VAT Codes, of course.

  • Go into Financials and select the VAT Return option.
  • Enter the correct start and end dates for the VAT Quarter in question.
  • Click the “Calculate” button (at this point, provided you have marked the previous quarter’s VAT transactions as reconciled, you can opt to choose “Yes” to include unreconciled transactions, if that option appears)
  • Print both the VAT Return and the Detailed report (either in hard copy or to pdf)
  • As an additional check, you could also print the Nominal Activity Report for the same date range, and check that it agrees to the figures on the VAT return report.
  • Once happy, take a backup of the Sage data.
  • Mark the VAT Transactions as reconciled by clicking the “Reconcile” button.  This ensures that the transactions won’t be included on a future VAT return by accident.
  • Run the VAT Transfer Wizard (from the Modules menu).  The VAT Liability nominal code is usually 2202.  Date the transfer journal as at the last day of the VAT quarter that is being completed.  This clears the Sales & Purchase VAT codes to zero (assuming that there were no errors) and makes future errors easier to find.  It also credits the VAT Liability Code, 2202 with the amount of VAT to be paid to HMRC.
  • Submit the Return by paper, online or alternatively (depending on your version of Sage) using Sage’s online submission.
  • When the VAT is actually paid to HMRC, process this a bank payment using the same VAT Liability Nominal Code (usually 2202) as above.  Sage will automatically debit this nominal code bringing it down to zero.
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