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ERROR: Manual adjustments on the tax reconciliation note do not agree to the current tax charge.

Article ID: 2679
Last updated: 07 Feb, 2020

If you get the following Check & Finish error in Accounts Production, it means that the Tax on Profit note needs to be reconciled.

  1. Go to Notes > Edit Notes > Tax on Profit note.
  2. The top section of the note gets auto-populated based on the postings you have already made. The bottom section of the note is the Breakdown of the Tax Charge and this needs to be filled in accordingly.

Example

Profit before tax as per the accounts:

8,870

Postings:

Corporation tax charge (Dr 3800):

1,689

Prior period adjustment (Dr 3810):

60

Deferred Taxation (Dr 3801):

50

Depreciation:

100

Expenses not allowed for tax:

10

From Corporation tax computation:

Tax losses utilised:

4

Capital allowances:

180

Research and development tax credit:

6

The top section of the note is already complete and will appear as shown:

Note: If postings are made to the components of corporation tax (codes 3820, 3821. 3822, 3830, 3831, 3832), then those values will appear in the top section in the relevant boxes.

  1. The breakdown section to be filled in as shown:

Please note: If a value needs to be deducted from the Tax on profit, enter the value with a minus sign. If a value needs to be added, enter the value with a plus sign.

Calculation

Value

Explanation

Tax on Profit @ 20%

8870 x 20%

1,774

Add Depreciation

100 x 20%

20

Add Expenses not allowed for tax

10 x 20%

2

Minus Tax losses utilised

20 x 20%

(4)

Minus capital allowances

180 x 20%

(36)

Short term timing differences

50

Deferred tax from the top section

Minus Research and development tax credit

6 x 20%

(1)

Prior period adjustment

60

Prior period adjustment from the top section

Difference in tax rates

6,611 x 1%

(66)

Two tax rates are shown in the screenshot taken from tax return:

Total tax charge for the period

1,774 + 20 + 2 – 4 – 36 + 50 - 1 + 60 -66

1799

Agrees with Total current tax charge after deferred tax

Note: In the breakdown section, apart from the fixed boxes used in the example, you can add further items from the drop down provided by selecting an item and clicking on 'Add'.

As can be seen in the above example, the Total tax charge for the period £1,799 in the Breakdown section agrees with the Total current tax charge including Deferred Taxation from the top section. This will clear the check and finish error.

Article ID: 2679
Last updated: 07 Feb, 2020
Revision: 13
Views: 1688
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