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Understanding VAT Control and VAT Suspense in QuickBooks

by Intuit•43• Updated 3 months ago

Learn how QuickBooks Online handles VAT through two key accounts—VAT control and VAT suspense—and what happens when you submit a VAT return to HMRC. This article explains the purpose of each account and how transactions move between them.


What’s the difference between VAT control and VAT suspense?

QuickBooks Online uses two accounts to manage VAT: VAT control and VAT suspense. Each has a distinct purpose depending on whether the VAT has been filed or not.

This is the default account where all VAT from transactions is stored until it is filed with HMRC.

  • The VAT control account holds the VAT for transactions that have not yet been filed.
  • The amount in this account forms the basis of your VAT return on the applicable dates.
  • Any transactions (like journals) that post to the VAT control account without VAT won’t appear on your VAT return.

The VAT control account is the default account in QuickBooks Online. VAT from transactions that have not yet been filed with HMRC will post to this account. This is where all of the VAT that makes up the return is stored.

The amount in this account will be used to calculate your VAT return on the applicable dates. Any transactions (such as journals) that post to the VAT control account without VAT will not appear on the VAT return.

Once VAT is filed with HMRC or a VAT period is marked as filed in QuickBooks, the amounts are moved into the VAT suspense account.

  • The VAT suspense account holds the amount that has been submitted to HMRC but not yet paid or refunded.
  • This ensures that once a VAT return is filed, its values are no longer included in the next return.
  • The amount remains in the VAT suspense account until you make the payment or receive a refund from HMRC.
  • The payment or refund is processed from the VAT suspense account and your linked bank account.
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Submitting a return to HMRC

Once you file your VAT return in QuickBooks Online, it cannot be unfiled. However, QuickBooks automatically tracks changes or missed transactions from closed VAT periods using a VAT exception report.


How QuickBooks handles corrections to closed periods

If you edit or add a transaction that belongs to a VAT period you’ve already filed, QuickBooks will flag it based on the transaction date.

  • You’ll see a warning, but you can still save the transaction.
  • These transactions are included in your current VAT return and will appear on the VAT exception report.
  • The VAT exception report highlights transactions that don’t belong to the current VAT period, but are included because they were left out of the previous one.
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