XBert Type: Standard
Accounting Software: Xero, QuickBooks Online
Country Restriction: United Kingdom only
Risk Type: Tax Risk
Business Function: Purchases
Overview
This XBert checks the VAT keyed onto a purchase bill against the VAT printed on the supplier document attached to it. When the two figures do not agree by more than normal rounding, the input tax claimed may be over- or under-stated. Whatever you key flows straight into box 4 of your VAT return, so catching the difference before you file lets you correct the figure now, instead of facing an HMRC adjustment, interest or a penalty later.
What it does
When you attach a supplier invoice to a bill, XBert reads the VAT figure printed on that document and compares it to the VAT you have actually keyed onto the bill. If the document shows one amount of VAT but a different amount was keyed, it works out the gap between the two and shows it to you in pounds. Because both figures are in the same currency and the difference is beyond normal rounding, this looks like a transposition or keying error rather than OCR noise.
How it works
XBert reads the VAT or GST amount from the supplier document attached to a bill and compares it to the VAT keyed onto the bill. It raises a flag when:
both the document VAT figure and the keyed VAT figure are present;
both figures are in the same currency; and
the two figures differ by more than a small rounding tolerance.
The difference matters in different ways depending on which way it falls:
If the keyed VAT is higher than the document, you over-claim input tax in box 4 of your VAT return. Under Making Tax Digital, HMRC can disallow the excess, charge interest, and apply a penalty for an inaccurate return.
If the keyed VAT is lower than the document, you under-claim and the business simply pays more VAT than it needs to.
A wrong VAT figure also distorts the net cost posted to the expense account, so your management figures and any margin reporting are off.
Once a return is filed, correcting it means an adjustment or an error notification to HMRC, which is extra work and can draw attention to the period.
Example/Use Case
Priya keys a stack of supplier bills for Harbour Joinery Ltd at month end. A plant-hire invoice from Meridian Tools shows £142.60 of VAT, but Priya mistypes it as £124.60, transposing two digits. The bill is approved and the £124.60 is what lands in box 4 of the quarter's VAT return. Months later the firm's accountant reconciles the purchase ledger to the filed return and spots that the bill does not agree with its attachment. Because the return is already filed, the £18 has to be corrected as an adjustment, the working papers re-checked, and a note added explaining the discrepancy - far more effort than a quick check at keying time would have taken.
Accounting software
This XBert runs on bills from Xero and QuickBooks Online.
Which countries it supports
This XBert applies to the United Kingdom only. It uses VAT terminology and HMRC rules specific to the UK.
Processes
Business area: Purchases (accounts payable). To resolve a flagged bill:
Select Resolve Now to open the bill in Xero.
Compare the VAT on the bill against the VAT printed on the attached supplier document.
If the keyed figure is wrong, correct it so it matches the document, then re-approve the bill.
If the document itself is unclear, or the attachment is for a different invoice, confirm the correct VAT with the supplier before the VAT return is filed.
Once the keyed VAT matches the supplier document, mark the XBert as resolved.