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When you enter transactions its important to use the right tax code otherwise your VAT returns are likely to either need adjustment or contain errors, but often when entering transactions your software won’t tell you what the codes mean, here is a list of Sage codes:
|T0||Zero rated transactions|
|T4||Sales of goods to VAT registered customers in EC|
|T7||Zero-rated purchases of goods from suppliers in EC|
|T8||Standard-rated purchases of goods from suppliers in EC|
|T9||Transactions not involving VAT|
|T20||Sales and purchases of reverse charges|
|T22||Sales of services to VAT registered customers in EC|
|T23||Zero-rated purchases of services from suppliers in EC|
|T24||Standard-rated purchases of services from suppliers in EC|
|T25||Flat rate accounting scheme, purchase and sale of individual capital items > £2,000|
There are different rates of VAT, depending on the type of goods or services your business provides. At the moment there are three different rates. They are:
- standard rate – 20 per cent
- reduced rate – 5 per cent
- zero rate – 0 per cent
You can check which rate to use on the HMRC Website http://www.hmrc.gov.uk/vat/forms-rates/rates/rates.htm
UK supplier who aren’t VAT registered would use T9 in Sage.
Personally I have always found this box a little odd as its not taken from invoices its calculated by you.
Box 2 Acquisition Tax is calculated as UK VAT due on VAT free purchase of goods from other Member States, i.e. 20% x Box 9 figure, the same amount is then entered in Box 4 (as noted below by HMRC) so the net effect is Zero.
Box 9 Total EU Purchases are the value of goods bought from other EU Member States on a VAT free basis.
The following are HMRC’s instructions:
Box 2: VAT due from you (but not paid) on acquisitions from other EU countries
You need to work out the VAT due – but not yet paid by you – on goods that you buy from other EU countries, and any services directly related to those goods (such as delivery charges). Put the figure in Box 2. You may be able to reclaim this amount, and if so remember to include this figure in your total in Box 4.
Box 4: VAT reclaimable on your purchases
This is the VAT you have been charged on your purchases for use in your business. You should also include:
- VAT due (but not paid) on goods from other EU countries and services directly related to those goods (such as delivery charges) – this is the figure you put in Box 2
If you trade regularly with the EU you may be required to do Intrastat Returns, here is a chart that explains the basics