Master AAT Bookkeeping 2026 – Sparkle in Level 2 with Confidence & Flair!

The VAT control account is used to summarise all VAT amounts in one place so you can see what you owe or can reclaim from HMRC. In practice, you record output VAT (VAT charged on sales) as a liability and input VAT (VAT paid on purchases) as recoverable, and the VAT control account brings these together into a single balance. This lets you reconcile the amount payable to HMRC on your VAT return with the entries in your ledgers. It isn’t used to record cash receipts (that’s the cash book) or to track purchases on their own (that’s the purchases ledger), and it doesn’t replace the cash book. For example, if you have output VAT of 5,000 and input VAT of 3,500, the VAT control account would show a net payable of 1,500, which you would report to HMRC. If the balance doesn’t align with the VAT return, you investigate posting errors or misstatements until they agree.