VAT Reconciliation
The VAT Reconciliation engine is a core feature of Complyax, designed to eliminate manual spreadsheet checking and ensure Making Tax Digital (MTD) compliance.
How the Engine Works
When you trigger a VAT reconciliation for a client, Complyax performs a deep, automated check:
- It connects to the client’s accounting software (Xero or QuickBooks) and downloads their ledger data for the specific VAT period.
- It runs the data through a rigorous Rules Engine, checking for Post-Brexit Postponed VAT Accounting (PVA) rules, Domestic Reverse Charge (DRC) conditions, and standard tax rate mappings.
- It compares the final “9-box” ledger totals against what HMRC is expecting.
The Anomalies Console
If the engine finds any discrepancies, it will flag the period and generate an Anomalies Console report. This report breaks down errors into four plain-English categories:
- Duplicate Transactions: Identifies expenses or invoices logged twice.
- Missing Evidence: Highlights transactions over a certain threshold that lack an attached receipt or invoice.
- VAT Rate Anomalies: Flags items where the applied tax code does not match the standard rules for that item category (e.g., claiming 20% VAT on a zero-rated train ticket).
- Period Mismatches: Finds transactions dated in the current period that were already reconciled previously, or vice versa.
Fixing Mismatches
Accountants can review the Anomalies Console and decide how to proceed:
- Request Evidence: Click a button to instantly send a request to the client for the missing receipt.
- Ignore/Override: If a rate anomaly is actually correct due to a special circumstance, the accountant can leave a note and override the flag.
- Mark as Ready: Once all anomalies are cleared or explained, the accountant clicks “Ready for Approval,” passing the VAT period to the Admin’s Review Queue.