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VAT and Sage

kazzymackazzymac New MemberRegistered Posts: 10
Hello, Can anybody please help me and clarify the correct VAT codes to use in Sage. Currently I use T9 coding for journals, salaries and T0 for suppliers not registered for VAT. I use the T5 coding for fuel (VAT 5%) plus T2 for insurance. A VAT officer has said that suppliers should be entered onto the VAT return as purchases so should therefore use T1 code but enter a zero amount. This conflicts with information given by another accountant. Can I have your thoughts and your experience with this please - I am getting so confused! Thanks:001_unsure:

Ok have done some more research and found the following:

supplier not registered for VAT (but should be T1 with no VAT OR you can use T0 (but not T9)
T2 bank charges/interest/insurance
T9 items outside the scope of VAT ie PAYE/journals

Comments

  • sheelaghsheelagh Well-Known Registered Posts: 133
    VAT and Sage

    I would agreed with your research. Any transaction with a T9 tax code will not appear on the Sage VAT return, T0 to T8 will all appear somewhere.
    The point about whether costs incurred with a non-registered supplier is interesting. Some say that purchases from non-registered suppliers should not be included in a VAT return, but I have never heard anyone suggest that you should use T1 and zero VAT. When posting purchase invoices it would do the same job, but you might run into difficulties if you are using the VAT cash accounting scheme.
  • BluewednesdayBluewednesday Font Of All Knowledge Registered Posts: 1,624
    I prefer keeping them on a separate code - it just makes checking the return easier.
  • PAMDILLPAMDILL Experienced Mentor Registered Posts: 716
    I just use T0 for them as if zero rated. I have not had any trouble with VAT inspections doing this.

    i have one annoying subcontractor who is not VAT registered who shows VAT on his invoice then below the invoice total marks it has a credit and states VAT held.

    The first time he did this I asked him why and he said it was because he was getting registered and would come back to me to get the VAT paid.


    That was several months ago and he still does the same.

    I have just ignored the VAT on his invoice and entered it with the net figure.
  • BluewednesdayBluewednesday Font Of All Knowledge Registered Posts: 1,624
    PAMDILL wrote: »
    I just use T0 for them as if zero rated. I have not had any trouble with VAT inspections doing this.

    not for VAT inspections but for my own checks

    There are so many ways of doing it but as long as the right things are shown on the VAT return it doesn't matter which way you do it
  • A-VicA-Vic Expertise Guaranteed Registered Posts: 6,970
    not for VAT inspections but for my own checks

    There are so many ways of doing it but as long as the right things are shown on the VAT return it doesn't matter which way you do it

    Was about to say the same.

    We set sage to show T9 as none vat T0 as zero and T1 vat
  • kazzymackazzymac New Member Registered Posts: 10
    Would like to just say thanks to all those that replied - much appreciated:001_smile:
    It certainly seems to be a minefield - I also checked on the Sage Forum where people also seem to be using the T0 coding for suppliers not registered for VAT rather than T1 and then zero in the VAT amount. Thanks again.:thumbup1:
  • JanJan Experienced Mentor Registered Posts: 654
    Kazzymac

    Just to throw my penny worth in ...I use T9 for bank charges/insurance/interest as they are outside the scope of VAT.
  • PoodlePoodle Experienced Mentor Registered Posts: 711
    Hi Kazzy

    Your suppliers who are not registered for VAT are still making taxable supplies to you and must be reported on your VAT 100 return in box 7 even though there is no VAT on the invoice. They are not zero rated, exempt or outside of the scope supplies, they are standard rated but with no VAT on them.

    Sage is set up to include cetain things in your VAT 100 return by default and unfortunately if you try to process these supplies using the defaults you will have problems. If you process as T9 then they do not add into the VAT100 if you set as T1 and operate cash accounting you may trigger a VAT amount calculating accidentally. I have actually asked Sage to add this to their wish list of amendments but it has not happened. That aside I know that people do post through T9 with no repercussion on a VAT inspection, but it does not make it right, just that it maybe was not spotted.

    To set this correctly you have to do as BW suggests and use another tax code to post these to and you set this in Sage as follows:

    Go into settings, confiuration editor, tax codes. You will see the default code setups here with rates and if they are included or not in the VAT 100 (a tick in the 'in use' column)

    Scroll down and highlight T10 and select edit. leave the VAT rate at 0.00 but tick the 'include in VAT return' box, add a narrative eg 'Non VAT Reg Supplers' and then save.

    If you then change the default in all of your supliers who are not registered for VAT to T10 and if you receive any payments on account for these people you will get the right result in future. Don't forget to change the supplier account to T1 if/when they register.

    Good luck

    Poodle
  • kazzymackazzymac New Member Registered Posts: 10
    Thanks everyone! I have amended my Sage systems to accomodate all of the information provided by your goodselves. Just need to amend everything for the new VAT temporary rate introduced by Mr Darling earlier - what a pain!:huh:
  • PoodlePoodle Experienced Mentor Registered Posts: 711
    Kazzy,

    If you are part way through the VAT cycle on Monday and if work pressures permit, I would really recommend reconciling your VAT to the 30th November, once all of your17.5% entries on, reconcile, print off and then change rates:001_smile:

    I expect Sage will email some sort of guide on this.

    Poodle
  • kazzymackazzymac New Member Registered Posts: 10
    Poodle,

    Good idea -I will do this on Monday. Thanks!
  • A-VicA-Vic Expertise Guaranteed Registered Posts: 6,970
    Poodle wrote: »
    Kazzy,

    If you are part way through the VAT cycle on Monday and if work pressures permit, I would really recommend reconciling your VAT to the 30th November, once all of your17.5% entries on, reconcile, print off and then change rates:001_smile:

    I expect Sage will email some sort of guide on this.

    Poodle


    About to do the same also cheers poodle
  • Shortbread64Shortbread64 New Member Registered Posts: 8
    VAT and Sage

    I was told that I could set up a new code on sage for 15% - say T4 - and run this alongside the current code of T1 of 17.5%. As the rate is going back to 17.5% we do not want to get rid of it. This way you can run both codes together and sage will work out the correct vat.
  • PoodlePoodle Experienced Mentor Registered Posts: 711
    Hi Shortbread64

    A perfectly fine alternative, just depends on volume of work really, they all work fine and as long as you remember to use the correct codes to get everything onto the VAT100 and in the right box and with the correct percentage then who really worries:001_smile:

    Poodle
  • JanJan Experienced Mentor Registered Posts: 654
    Your suppliers who are not registered for VAT are still making taxable supplies to you and must be reported on your VAT 100 return in box 7 even though there is no VAT on the invoice. They are not zero rated, exempt or outside of the scope supplies, they are standard rated but with no VAT on them.


    Thanks Poodle, it something that has bothered me for a long time and no-one has been able to answer! :blushing: Different accountants seem to give conflicting advice on which code to use in Sage.

    As for 15% VAT I too have set up a new VAT code, seems the easiest way round it, especially as the rate will alter again, but to what who knows.
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