Sage query

System

Hi

Can any one please advise me on two queries I have; the first is when using Sage, I never know what the difference is when it comes to T0 and T9 in the VAT code. Both mean there is no VAT but how do you know which one to use and when.

Secondly the company I do some book keeping for, received a cheque for compensation for loss of business from BT due to telephone lines being distrupted. Would this include VAT as it doesn't say on their remittance?, I would assume it does as BT is VAT registered. I just didn't know if might be a different rule for compensation?

Thanks in advance Helen :oops:

System

Re:Sage query

T0 is the tax code for zero rated goods. T9 is for exempt items.

In terms of the VAT on compensation. There is not normally VAT on compensation payments because it is not consideration for taxable supplies which would usually be the case in the normal course of trade. It is merely an agreement between 2 parties to compensate one of the parties for loss of business/earnings.

Again this area is very grey in terms of HMRC interpretation (i.e. interpreting what is compensation), however the rudimentary facts of your situation would suggest that it is outside the scope of VAT.

Kind regards
Steve

System

Re:Sage query

As Steve has said T0 = zero rated and T9 is for exempt items - on Sage anything that has been T9'd will not show on the VAT return, but T0s will (though obviously with no VAT incurred).

Typical T0s include post, milk, etc and T9s are wages etc (and the cheque to the VATman!!).

Things like insurance and bank charges are another grey area - one of my clients had a VAT inspection and the inspector was happy that I had T0'd them - just remember to be consistent.

Claudia

System

Re:Sage query

Thanks both for your help.

Helen