Which statement about the VAT control account is true?

• A. The VAT control account helps reconcile total VAT payable to HMRC.
• B. The VAT control account tracks only purchases.
• C. The VAT control account is part of the cash book.
• D. The VAT control account records bank charges.

Answer: (A)

The VAT control account is a general ledger summary that brings together the VAT charged on sales (output VAT) and the VAT paid on purchases (input VAT). When you make a sale, you record VAT output as a liability to HMRC; when you buy, you record VAT input as recoverable. The control account balances these two sides, showing the net amount you owe to or are owed by HMRC. At the period end, the balance should align with the VAT return, representing net VAT payable (output VAT minus input VAT). It isn’t limited to purchases, nor is it part of the cash book, and it doesn’t record bank charges. This is why the statement about reconciling total VAT payable to HMRC is correct.