A VAT imbalance can cause you more headaches than a nil return.

Let me explain.

Imagine Kamau sells goods worth KSh 100,000 to another business.

He issues an eTIMS invoice for the full amount.

But when filing his VAT return, he declares sales of only KSh 80,000.

His customer, however, claims input VAT based on the KSh 100,000 invoice.

Now the two records don't agree.

And KRA can pick up that difference.

This doesn't only happen with sales.

It can also happen when:

• Your supplier issues an invoice, but you fail to capture it correctly.
• You claim input VAT on an invoice that doesn't match the supplier's records.
• Your eTIMS sales don't agree with your VAT return.
• You enter the wrong buyer PIN or invoice details.
• You record a transaction in a different tax period without properly accounting for the timing difference.

Now, here's the thing.

Not every VAT imbalance means someone is committing tax fraud.

Sometimes it's a missing invoice, a timing difference, a data-entry error or simply poor record-keeping.

But if KRA raises a query and you cannot explain the difference, defending your VAT position becomes much harder.

So, what should you do?

1. Reconcile eTIMS sales against your VAT return before filing.
2. Match supplier invoices against your purchase records.
3. Follow up on missing or incorrect invoices.
4. Investigate differences. Don't just adjust figures to force them to agree.
5. Keep supporting documents for every correction.

Your VAT return should tell the same story as your actual transactions and supporting records.

Don't wait for KRA to flag the imbalance.

Reconcile with your customers and suppliers before filing.