What a VAT Health Check Covers

A health check traces the return to its records

A VAT health check compares the figures in the return with the records that produced them. The FTA VAT Returns User Guide identifies the return fields for sales, purchases, output tax, input tax and the amount payable. The review then follows those fields back to invoices, credit notes, import records, contracts and ledger entries.

Start with the return period and the draft figures, then build the evidence around each material number. A sales total is not proven because it agrees to the trial balance. It is proven when the sales ledger, issued invoices, credit notes and supply dates tell the same story.

If your return is nearly ready, the useful question is not simply whether the books balance. Ask which document would explain each unusual movement, and who will obtain it before submission. That turns the review into a short list of decisions rather than another export of accounting data.

The right scope depends on the evidence trail

A single-company return with one ledger, few adjustments and complete invoices may need a focused check. A business with online sales, several bank feeds, imports, credit notes or more than one person posting VAT needs a wider evidence map. The object that changes the scope is the record trail, not the size of the office.

The FTA Get to know your Tax Obligations guide names the records a VAT-registered business should retain, including supplies and imports, tax invoices, tax credit notes, adjustments and goods for which input tax was not deducted. Those records tell us what must be requested before a reviewer can reach a sound conclusion.

We recommend starting with exceptions and source documents, because a clean total can conceal a wrong tax code or a missing credit note. If the preparer also approves the return, give the exception list to a second reader. That small separation catches assumptions that routine bookkeeping leaves untouched.

• One owner for every missing invoice or unresolved tax code in the review.
• One period label on every ledger export and reconciliation file.
• One source reference beside every proposed correction or exclusion.
• One second reader for material or unusual movements in the return.

The deliverable is a traceable correction list

Output tax is tested from issued invoices, credit notes, debit notes, deposits and the supply dates recorded in the sales ledger. Input tax is tested from supplier invoices, purchase records, business purpose, payment evidence and any restrictions that apply to the expense. Imports and reverse-charge entries get their own reconciliation.

Each exception should name the object that needs attention. Write invoice number, credit note, customs entry, supplier statement, contract or journal reference beside the proposed action. ‘Review supplier’ is too vague. ‘Obtain the missing tax invoice for the March warehouse charge and confirm the service period’ can be assigned and closed.

Example only: the ledger showed AED 48,000 of input VAT, the customs and purchase file supported AED 41,600, and the AED 6,400 gap was two import entries posted to the wrong period. AED 41,600 + AED 6,400 = AED 48,000. The arithmetic is simple. Finding the two entries is the work that makes the number usable.

• Sales invoices and credit notes matched to the supply period and return field.
• Supplier invoices tied to business purpose and payment evidence before approval.
• Import declarations tied to reverse-charge workings and VAT return fields.
• Correction entries separated from routine bookkeeping journals and closing adjustments.

Use one evidence map from first export to sign-off

Pull the sales ledger, purchase ledger, VAT control accounts, credit notes, import records, reverse-charge workings and prior correction entries into one review folder. Record the period covered and the export date. A reviewer should be able to open an exception and reach the underlying invoice or customs record without asking which version was used.

The table below is a practical scope map. It is not an FTA form. It shows the connection between the source object, the test and the decision that should appear in the handover. Keep the same labels in the reconciliation file and the action list.

Once the checks are complete, separate three outcomes: figures ready to file, evidence still required and tax treatment requiring a decision. Do not bury the last two inside a clean total. The owner should approve each unresolved item, with the affected return field and document reference visible.

A review identifies evidence gaps, it does not invent the fact

The FTA VAT Returns User Guide confirms the return fields and filing route, but it does not state how every business-purpose question should be decided where an invoice is present and the surrounding facts are incomplete. That boundary is real. The reviewer must read the contract, payment record, description of the service and use of the expense before recommending a treatment.

The official guide also does not replace the company’s own records. The FTA expects a taxable person to keep the documents behind its supplies, imports, invoices and corrections. If a document cannot be obtained, record that fact and state the consequence. Do not turn an absent supplier invoice into a confident approval.

At the decision point, file only after the open items have an owner and a resolution. The result should be a signed reconciliation, a correction list and a short evidence register that names every document still outstanding. That is what lets the business explain its return later without rebuilding the quarter from email.

• Owner, status and due date against every open item in the exception register.
• Document request naming the exact invoice or customs record still missing.
• Approval note for each treatment decision still under review by management.
• Signed reconciliation stored with the return evidence pack and correction list.