ERROR: Manual adjustments on the tax reconciliation note do not agree to the current tax charge.
If you get the following Check & Finish error in Accounts Production, it means that the Tax on Profit note needs to be reconciled.
- Go to Notes > Edit Notes > Tax on Profit note.
- 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
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Profit before tax as per the accounts:
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8,870
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Postings:
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Corporation tax charge (Dr 3800):
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1,689
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Prior period adjustment (Dr 3810):
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60
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Deferred Taxation (Dr 3801):
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50
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Depreciation:
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100
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Expenses not allowed for tax:
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10
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From Corporation tax computation:
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|
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Tax losses utilised:
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4
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Capital allowances:
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180
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Research and development tax credit:
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6
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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.
- 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.
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Calculation
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Value
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Explanation
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Tax on Profit @ 20%
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8870 x 20%
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1,774
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Add Depreciation
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100 x 20%
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20
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Add Expenses not allowed for tax
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10 x 20%
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2
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Minus Tax losses utilised
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20 x 20%
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(4)
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Minus capital allowances
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180 x 20%
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(36)
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Short term timing differences
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50
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Deferred tax from the top section
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Minus Research and development tax credit
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6 x 20%
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(1)
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Prior period adjustment
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60
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Prior period adjustment from the top section
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Difference in tax rates
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6,611 x 1%
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(66)
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Two tax rates are shown in the screenshot taken from tax return:
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Total tax charge for the period
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1,774 + 20 + 2 – 4 – 36 + 50 - 1 + 60 -66
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1799
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Agrees with Total current tax charge after deferred tax
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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.
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