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Due to the change in the VAT rate which takes place on 1 January 2010 your Sage accounting software will need to be updated. We suggest that this is not done until you have entered most of the December transactions onto Sage.
We have attached some guidance on how to change your Sage accounts software.
Alternatively, Sage have released a ‘VAT change wizard’ which can be used if you have Sage cover (The wizard can only be used if you use Sage 50 Accounts 2007 or above, or Sage Instant Accounts v14 or above).
If you have any further queries about this please do not hesitate to contact either Andrew Benson or Victoria Tait on 01768 864466.
To change the VAT rate back to 17.5% you need to:
- Click on ‘Settings’ at the top of the screen
- Select ‘Configuration’
- Choose the ‘Tax codes’ tab
- (If you use sage accounts v9 or below you will need to click on settings and then select ‘Tax codes’)
- Select code T1 and then click edit
- Enter 17.5 as the new VAT rate and press OK
- Then click on ‘Apply’ to save the changes, if you are prompted to save the changes click No (Sage Instant Accounts v14 – Click save and then close)
It may be that you receive a late purchase invoice from a supplier which still has VAT on at 15%. To deal with this you can amend a tax code as detailed below:
- Click on ‘Settings’ at the top of the screen
- Select ‘Configuration’
- Choose the ‘Tax codes’ tab
- (If you use sage accounts v9 or below you will need to click on settings and then select ‘Tax codes’)
- Select code T6 and then click edit
- Enter 15 as the new VAT rate
- Ensure that the ‘Include in VAT return’ box has a tick in it
- Ensure that the EC code box does not have a tick in it and press OK
- Then click on ‘Apply’ to save the changes, if you are prompted to save the changes click No (Sage Instant Accounts v14 – Click save and then close)
To change the VAT rate back to 17.5% you need to:
- Click on ‘Settings’ at the top of the screen
- Select ‘Configuration’
- Choose the ‘Tax codes’ tab
- (If you use sage accounts v9 or below you will need to click on settings and then select ‘Tax codes’)
- Select code T1 and then click edit
- Enter 17.5 as the new VAT rate and press OK
- Then click on ‘Apply’ to save the changes, if you are prompted to save the changes click No (Sage Instant Accounts v14 – Click save and then close)
It may be that you receive a late purchase invoice from a supplier which still has VAT on at 15%. To deal with this you need to do the following:
- Click on ‘Settings’ at the top of the screen
- Select ‘Company Preferences’
- Click on ‘Parameters’
- Check that there is a tick in the box titled ‘Item VAT amendable’, and then press OK.
When you are posting the invoice on to sage you will still select a T1 tax code, but you will need to overwrite the amount of VAT that sage has calculated as this amount will be incorrect.
1) Future Transactions
If you have posted transactions in the future then the VAT element of the transaction may be incorrect. To check for any such transactions you should do the following:
- Click on ‘File’ at the top of the screen
- Select ‘Maintenance’
- Click on ‘Check data’, this may take some time to complete
- When this completes click on the ‘Warnings’ tab, any warning that says the following is a transaction which has been posted in to the future:
“Transaction xxxx posted on date [xx/xx/xx]”
Just ignore any other warnings which are brought up
- These transactions will need to be amended in corrections.
2) Invoicing on Sage
For invoices which you have entered on to sage with a VAT rate of 15%, which should have had VAT charged at 17.5%, these can be amended by:
- Selecting ‘Invoicing’ from the Modules option at the top of the screen
- Double-click on the required invoice
- Click in the Description column of the first item that uses the standard rate of VAT, then press F3 on your keyboard (For Service invoices, click in the Details column then press F3).
- Select tax code T1 from the drop down list (The correct tax code should already be in the box, but for sage to recalculate the amount of VAT due the tax code needs to be selected again). This then calculates the amount of VAT using the new rate.
- Click OK, this should take you back to the invoice which you should save and close.
3) Recurring Entries
If you have recurring entries set up which have VAT charged on them these will need to change. This can be done by:
- Selecting ‘Bank’ from Modules at the top of the screen
- Click on ‘Recurring’
- You will then need to edit each entry which has VAT charged. You can do this by changing the amounts in the net and VAT boxes.
- Once this is done you can press OK at the bottom of the screen and the entry can now be posted.
Due to the change in the VAT rate which takes place on 1 January 2010 your QuickBooks accounting software will need to be updated. We suggest that this is not done until you have entered most of your December transactions onto QuickBooks.
QuickBooks have provided the following notes on the website below. You should find that you will not need to create any new ‘VAT items’, ‘VAT groups’ or ‘VAT codes’ but it is worth checking the tables on the website.
http://support.intuit.co.uk/quickbooks/en-gb/kb/vat/file-vat/4471.html
If you have any further queries please get in touch with either Andrew Benson at our Penrith office on 01768 864466 or Judith Story at our Carlisle office on 01228 530913.
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