Bank Reconciliation · United KingdomIf the bank isn’t reconciled, the VAT return built on it can’t be trusted either.
We match every bank, card and payment-platform transaction to your books, explain what doesn’t match and correct it, monthly or as a one-off catch-up before a VAT deadline or year end.
Accounting
At a glance
- Authorities
- HM Revenue & Customs (HMRC)
- Forms & references
- VAT Return (MTD)
- Software
- Xero, QuickBooks, FreeAgent or Sage
- Accounts covered
- Bank, credit card, currency accounts, Stripe, PayPal, SumUp, Amazon and similar
- Format
- Monthly, before each VAT return, or a one-off catch-up
- You receive
- Reconciled balances and a record of every adjustment
Overview
What it is, and why it matters.
Reconciling the bank means proving that every transaction on your statement is in your books once, and only once, and that the closing balances agree. In Xero and QuickBooks this happens against bank feeds, which makes it quick when it is kept up and slow when it isn’t.
Under Making Tax Digital, your VAT return is built from the records in your software. If a sale is missing, a supplier bill is duplicated or a transfer has been coded as income, the VAT figure is wrong too. Reconciling before each VAT period is closed is the simplest control available.
Many of the awkward items in UK small business accounts come from outside the bank: Stripe, PayPal, SumUp and Amazon settlements paid out net of fees, director spending on personal cards, foreign currency accounts, and payments to HMRC that need allocating to the right tax. We untangle these and leave a clean position to build on.
Who needs it
Who typically needs it.
- 01
VAT-registered businesses
Businesses that want each VAT return built on reconciled figures before it is submitted through MTD software.
- 02
Businesses paid by card terminal or online
Cafés, shops and online sellers paid through SumUp, Stripe, PayPal or Shopify, where each payout mixes many sales with fees and refunds.
- 03
Companies with a long unreconciled list
Businesses whose Xero or QuickBooks file shows hundreds of unmatched bank lines or a suspense account nobody has cleared.
- 04
Companies with currency accounts
Businesses holding US dollar or euro balances with Wise, Revolut or a high-street bank, where exchange differences need recording properly.
When you need it
The moments that usually trigger it.
- Your VAT return is due and the bank hasn’t been reconciled for months.
- Your bank feed dropped and was reconnected, and transactions now appear twice.
- You changed accountants and the opening balances in your software don’t match last year’s accounts.
- Your suspense account has grown and your year-end accounts can’t be finished until it is cleared.
- HMRC’s online account shows a different VAT or corporation tax balance from your books.
Scope
Exactly what we handle.
Our engagement letter lists these specifically, so you know what is included before any work begins.
- 01
Reconciling each bank, credit card and currency account to its statements.
- 02
Clearing accounts for Stripe, PayPal, SumUp, Shopify and Amazon, with gross sales, fees and refunds separated so VAT and income are right.
- 03
Finding and removing duplicates created by feeds, CSV imports or manual entries.
- 04
Clearing suspense accounts, with corrections posted and explained.
- 05
Posting director spending on personal cards, and company money used personally, through the director’s loan account.
- 06
Recording exchange differences on foreign currency accounts and transfers.
- 07
Allocating payments to and from HMRC between VAT, PAYE and corporation tax.
- 08
Catch-up reconciliations for past months, oldest first, locked once complete.
The process
How it runs, step by step.
Timings depend on the authority and on how quickly documents come together. We tell you what’s typical for your case at the start.
Start with a conversationCollect statements and access
We list every account the business uses, including payment platforms and any personal cards used for business costs, and gather statements for the period.
Agree the starting balance
We tie the opening position to your last filed accounts or a statement date you trust.
Match and trace differences
We match transactions and trace each difference: duplicates, missing items, net settlements, transfers between accounts and uncleared payments.
Correct and explain
Corrections are posted with clear descriptions. Anything we can’t resolve goes on a list with a proposed treatment for a director to approve.
Lock the period
Once reconciled, we lock the period in your software so VAT returns already filed can’t be changed by later edits.
What we’ll need
The information to have ready.
A typical checklist. After the first conversation we send a version specific to your situation, so you don’t gather anything you don’t need.
Statements
- Bank and credit card statements for every month in scope
- Settlement or payout reports from Stripe, PayPal, SumUp, Shopify or Amazon
- Currency account statements
Access
- Adviser access to Xero, QuickBooks, FreeAgent or Sage
- Agent authorisation, or statements from your HMRC online account for VAT and corporation tax
Background
- Last filed accounts and VAT returns
- Explanations of transfers to and from personal accounts
- Loan and finance agreements
Please don’t email passports or bank statements. Once we’ve spoken, you’ll get access to a secure upload.
Common mistakes
Where this usually goes wrong.
The problems we are most often asked to fix, and what they tend to cost.
- Mistake 01
Recording marketplace payouts as net sales
Amazon and Stripe settlements are paid net of fees. Recording only the payout understates sales, hides costs and can put VAT on the wrong figure.
- Mistake 02
Reconciling to the feed instead of the statement
Feeds can drop or duplicate lines. The statement is the source of truth, and the closing balance should be checked against it every period.
- Mistake 03
Leaving unknowns in suspense
A suspense account is a temporary holding place, not an answer. Items still there at the year end delay the accounts and may mean VAT was claimed or missed in error.
- Mistake 04
Editing periods after a VAT return is filed
Changing transactions in a period already submitted makes your software and the filed return disagree. Errors should be corrected through the next return where the rules allow, or reported to HMRC separately where they don’t.
Worth knowing
The limits, stated upfront.
We can only reconcile accounts for which we receive statements or access.
Reconciliation is not an audit or a fraud investigation, though we will tell you about anything unusual we find.
Where a catch-up shows that VAT returns already filed were wrong, correcting or reporting the errors to HMRC is a separate step we discuss with you first.
Old differences that can’t be traced may need a documented write-off approved by a director.
Questions
Bank Reconciliation: frequently asked.
If yours isn’t here, ask us directly. We’ll answer in plain terms.
Ask a questionHow often should I reconcile my business bank account?
At least monthly, and always before a VAT return is prepared. With bank feeds in Xero or QuickBooks, a weekly reconciliation often takes only a few minutes.
Why does Xero show duplicate transactions?
Usually because a statement was imported manually while the bank feed was also running, or a reconnected feed brought old transactions in again. We identify and remove duplicates by checking against the bank statement, not the feed.
How should Stripe or PayPal payouts be recorded?
Through a clearing account for each platform. Gross sales go in, fees and refunds come out, and the payout to your bank clears the balance, so sales and fees are both visible.
What if a catch-up shows my earlier VAT returns were wrong?
Net errors within HMRC’s limits (£10,000, or up to £50,000 where the error is no more than 1% of Box 6 turnover, at the time of writing) can usually be corrected on your next return. Larger or deliberate errors must be reported to HMRC separately through its online error correction service. We quantify the errors and explain the options before anything is submitted.
Can you reconcile accounts held in other currencies?
Yes. We record transactions at the rate applied and post the exchange gains or losses, so the currency balance and its sterling equivalent both reconcile.
How long will a catch-up take?
That depends on transaction volume, the number of accounts and how much paperwork exists. After a short review of your file we give you a scoped estimate and tell you which months are likely to take longest.
Related
Often needed alongside this.
The equivalent in our other countries
Speak with a consultant
Talk to us about bank Reconciliation.
Pick the closest match and we’ll take it from there. You’ll get a written scope and fee before any work begins.
Or use our three-step guide, or email hello@fiscorra.com
