XBert Type: Standard
Accounting Software: Xero
Country Restriction: ZA only
Risk Type: Tax Risk
Business Function: Bookkeeping
Overview
The “Non VAT Account Has VAT Against It” XBert helps identify accounts that are set to be VAT-exempt or non-tax relevant, but have VAT transactions recorded against them. This alert ensures your tax configuration is accurate and aligned with South African Revenue Service (SARS) rules to prevent VAT compliance risks.
What it does
This XBert scans general ledger activity over the past year to find accounts marked with tax types such as NO VAT, Exempt Purchases, Zero Rate, or other non-tax classifications. If VAT is still being recorded against these accounts, XBert flags this mismatch. Only accounts with a VAT total over R10 (or less than -R10) are included.
How it works
XBert examines both the default tax settings and the actual usage of accounts in your accounting system. It compares the declared tax status (non-VAT) with transactions that still include VAT. If there's a discrepancy, it may mean the account setup is incorrect or that the account has been misused during data entry (e.g., overriding tax settings on a transaction).
Example / Use Case
Zoe modifies the default tax setting for a standard Sales account from Standard Rate Sales (15%) to Other Sales (0%). John, unaware of this change, creates an invoice using this account. The invoice is sent to a customer without VAT, even though it should legally include it. In another scenario, John creates a new revenue account marked as Other Sales (0%) and instructs Zoe to use it. She adds line items that require VAT, but since the account is non-tax, no VAT is collected. Both situations can trigger a SARS audit and force the business to pay the uncollected VAT from its own funds.
Accounting software
Xero
Which countries it supports
South Africa only
Processes
This XBert falls under the VAT Compliance category within Bookkeeping.
To address this:
Review the recent usage of the flagged account (last 12 months).
Verify if the account should have a different default tax setting (e.g., 15% VAT).
Check whether users have been overriding the tax setting incorrectly on invoices, bills, or payments.
Determine if a different account with the appropriate VAT treatment should be used instead.
Making sure your accounts are correctly configured and consistently used helps maintain accurate VAT reporting and lowers the risk of costly adjustments during an audit.