Your stocktake says £9,400, the accounts say £8,100: why the two never match

Your stocktake report says £9,400. Your accountant's draft accounts say £8,100. Neither of them is wrong, and nobody is fiddling anything. They're answering two different questions with two different rulebooks, and the gap between them has six boring, checkable causes. Work through them in order and the two numbers reconcile, usually to within pennies. Skip the check and you either pay tax on stock you don't have or understate profit on stock you do.

This guide is the reconciliation. If you want the underlying rules on what goes in the accounts, the year-end stock valuation guide covers the legal basis properly; this page is for the moment the two numbers land on your desk and disagree.

The six honest reasons the numbers differ

1. One is at selling price, one is at cost

The biggest gap and the most common. A stocktake report usually shows your stock at retail value, at cost, or both, because retail is what variance gets valued at and cost is what the accounts want. HMRC's rule for the accounts is the lower of cost and net realisable value (Business Income Manual, BIM33115, standing on a 1949 case about, of all things, stock valuation). If your accountant has been handed the retail figure, the accounts are overstated by your entire margin. Check which page of the report got sent before you check anything else.

2. One includes VAT, one doesn't

If you're VAT registered, stock goes in the accounts excluding VAT, because the VAT on your purchases was never your money. A count priced from till prices or gross invoice values carries VAT inside it. The ex-VAT versus inc-VAT guide covers this trap in full; here it's enough to say a fifth of the gap can be VAT alone.

3. The count wasn't on the year-end date

You counted on the 20th, the year ends on the 31st. Eleven days of deliveries in and pints out sit between the two numbers. The fix is a roll adjustment: take the count, add deliveries since, subtract consumption since (from till sales at cost), and you have a year-end figure. Professional stocktakers certify year-end valuations exactly this way, rolling a count forward or back to the accounting date; it's a routine service, not an exotic one. Keep the delivery notes and the till Z reads between count and year end and the roll is ten minutes of arithmetic.

4. They're not counting the same things

Wet stock only, or food too? Snacks and bar sundries? The CO2 and cellar gas? Unopened cleaning chemicals? A stocktaker hired to do the bar did the bar; your accountant may be expecting everything saleable plus consumable stores. Neither is wrong, but the two scopes can be hundreds of pounds apart. Agree the scope in writing once and the problem never comes back.

5. The prices inside the count are estimates

A count is only as good as the cost prices behind it. Placeholder prices left over from setup, an old keg price from before February's rise, part bottles estimated by eye rather than weighed or measured in tenths: each one bends the total quietly. If the count and the accounts disagree by an awkward, un-round amount, stale cost prices are a good suspect.

6. Cut-off: the dray that beat its own invoice

The classic. A delivery arrives on the 30th, the invoice turns up dated the 3rd. Your count includes the kegs because they were physically there; your purchase ledger doesn't include the cost yet. Unless the accountant accrues the invoice, stock is up, purchases are down, and profit is overstated by the whole delivery. The same thing runs in reverse for anything invoiced before the year end but delivered after. Hand over the delivery notes from the last week of the year and say so.

A worked reconciliation

Illustrative figures, flagged as such, but this is the shape of every reconciliation I've seen work.

From count-day report to accounts figure. Illustrative numbers, author's arithmetic; the point is the steps, not the amounts.

Step	Adjustment	Running figure
Stocktake at cost, ex VAT, counted 20 March		£9,400
Consumption 20 to 31 March, at cost from till sales	−£1,100	£8,300
Gas cylinders and consumables outside agreed scope	−£120	£8,180
Keg counted in both cellar and count sheet (duplicate)	−£80	£8,100
Accounts figure, 31 March		£8,100

No mystery, no shrinkage panic, just three adjustments. When a reconciliation won't close, the residue is nearly always reason 1 or reason 2 hiding in a subtotal: somewhere a retail or VAT-inclusive number got mixed into a cost column.

Why it's worth the ten minutes

Stock is profit you haven't sold yet, so every pound of stock error is a pound of profit error. At the 19% small profits rate of corporation tax, £1,000 of overstated stock is roughly £190 of tax on profit that doesn't exist. And because this year's closing stock is next year's opening stock, the error runs through two years' accounts with opposite signs, which makes both years look strange and neither look wrong enough to catch. Cost also includes getting the stock to you: HMRC's BIM33135 puts delivery charges into the stock figure, which most till-price counts quietly miss.

What to hand the accountant

The count report clearly marked at cost, ex VAT, with the count date on it. The delivery notes between the count and the year end, both directions. The till sales for the same window. Your wastage log for the period, because written-off stock shouldn't be in the figure. And a one-line note of the scope: what was counted and what deliberately wasn't. That pack turns the annual stock argument into a five-minute email.

Common questions

Which number actually goes in the accounts?

Cost, or net realisable value if that's lower (dead stock you'll have to dump below cost is the usual case), excluding VAT if you're registered. Never the retail valuation. The year-end valuation guide has the rules and the case law.

Do I have to count on the exact year-end date?

No. Count as close as you reasonably can and roll the figure to the date with deliveries and consumption. The further the count sits from the year end, the more the roll relies on your till and delivery records being right, so closer is better, but the 31st of March at midnight is not required.

Is the pubco audit figure the same as the accounts figure?

No, and treating them as interchangeable causes exactly this problem. An audit is a variance exercise valued at retail; the accounts want cost. Same cellar, different question. The audit-versus-stocktake guide untangles the four numbers that all get called "the stock figure".

My software and my stocktaker disagree as well. Who's right?

Before deciding anyone is wrong, line up basis, VAT treatment, scope and count date between the two, because in my experience that's where the whole disagreement usually lives. Two counts on the same basis that still disagree means one of them has a counting or pricing error, and the bigger, rounder the difference, the more likely it's a whole container counted or priced wrong somewhere.