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Post Info TOPIC: Sage Tax Codes (again)


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Sage Tax Codes (again)


If a business makes exempt supplies (medical clinic) how should I input invoices from suppliers that are registered for VAT?

What tax code (T0, T1. etc)?

What goes is 'net' field?

What goes in 'VAT' field?

 

If you could help me I'd be grateful. Cheers.



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-- Edited by Rhianrach on Saturday 7th of January 2012 07:26:13 PM

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Steve



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If you are making exempt products and vat registered, then you should treat your supplier invoices the same as anyone else. Net in the net box T1 (assuming these are vatable supplies at the full rate and that T1 is set to 20%) in the vat box and your vat should work itself out. This then means that when you run your vat return then you will have no sales tax (as your products are exempt) but lots of purchase tax owed to you by HMRC. They don't like giving you money and a certain level used to trigger a visit, roughly £3000 so it may be worth while trying to keep it under that limit by more frequent vat returns.

 

I hope I understood your question correctly evileye



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Steve


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Hi there,

Does the business make totally exempt supplies? If so, they will not be able to register for VAT and consequently will not be able to recover VAT on purchases/expenses. Therefore you should enter all supplier invoices with a T9 tax code.

http://www.hmrc.gov.uk/vat/managing/reclaiming/partial-exemption.htm

HTH

Pauline



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Pauline



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Hi there,

If your company is exempt from VAT, then T0



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luther


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The business makes only exempt supplies and so is not registered for VAT. Obviously, then, we don't want to have a full purchase tax control account.

Is it T9 or T0, then?
Do I put the VAT amount as 0 in the Sage field?

Suppose I have this info:

Net: £100
VAT: £20
Total £120

How do I fill this info in on the batch invoices screen on Sage?

Cheers.


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Hi there,

If you are not registered for VAT then you do not have to account for VAT at all.

So, if posting your example it would be £120 in the net field and tax code T9. I think you can set the defaults for customers and suppliers to be T9 in the Settings menu.

HTH
Pauline

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Pauline



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Hi there,

Not to say I am totally correct on this, but.....

As your company is exempt from VAT, then use T9

 

A VAT company

T0 is vatable at 0% so it shows in the VAT report, I think this is, if you did have an inspection they can see that you are not claim or charging VAT.

T1 is at the standard rate and will appear in the VAT report

T2 is if you use things like stamps, insurance, bank charges or rent.... this is exempt and will appear in the VAT report....T0 and T2 appears in Box 6&7 but will not effect the amount of VAT payable or reclaimable.

T9 is if you are doing wages, private use, entertainment...T9 is out of scope and does not show at all in the VAT report

I hope this is ok for you. VAT is always a difficult thing to understand. You could always contact HMRC or look on the internet or even speak to JAMES on the forum.

Goodluck

Luther.



 



 



-- Edited by lutherparker on Monday 9th of January 2012 09:24:46 PM

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luther


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Hi There

Luther i think you are wrong with your post.

The key point is the company is not registered for VAT so the full amount will go in the net box and £nil in the VAT box.  All items should be coded as T9 but wont really matter what you code as if the company is supplying exempt supplies only it will never need to do a VAT return.

Regards

MarkS



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Providing accounting, bookkeeping, payroll and tax services to small and medium sized businesses across Central Scotland and beyond.



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HumanShale wrote:

The business makes only exempt supplies and so is not registered for VAT.


 Hi Luther,

The business is not VAT registered, so will not have to account for VAT on anything! 

Pauline



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Pauline



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Hi MarkS,

Yes, sorry T9, I think I got carried away as I was explaining if the was Vat reg, then they would use different tax codes....thankyou for correcting me.

Sorry Human shale T9 for every entry.

Luther.

 



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luther


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Rhianrach wrote:

If you are making exempt products and vat registered, then you should treat your supplier invoices the same as anyone else. Net in the net box T1 (assuming these are vatable supplies at the full rate and that T1 is set to 20%) in the vat box and your vat should work itself out. This then means that when you run your vat return then you will have no sales tax (as your products are exempt) but lots of purchase tax owed to you by HMRC. They don't like giving you money and a certain level used to trigger a visit, roughly £3000 so it may be worth while trying to keep it under that limit by more frequent vat returns.

 


Rhianrach totally wrong advice.

Admittedly at the time of your post you didnt know the client wasnt VAT registered.

However the point raised the matter of exempt supplies.  That should have raised the alarm bells of "partial exemption" so in no way are purchase invoice treated the same as any other VAT business.

Will need to identify what purchases are directly related to exempt supplies (cant be reclaimed) what purchases are directly relate to VATable supplies (if any and can be claimed) and what purchases are related to a mixture of exempt/VATable supplies (when the partial exemption rules are applied.)

Should never advise clients to keep claims below a "trigger visit" amount.  They are either entitled to reclaim the VAT or they are not.  If they are entitled to reclaim the VAT then they should claim it in full provided they have applied the correct rules and have all the relevant documentation to support.

Regards

MarkS



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Mark Stewart CA

http://stewartaccounting.co.uk/

Providing accounting, bookkeeping, payroll and tax services to small and medium sized businesses across Central Scotland and beyond.



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T9 is for all that does not need declaring on VAT return (non atable tax codes) - ie salaries, dividends, loans etc and companies not vat registered.
for a full list in sage go to the modules:
settings / configurations / tax codes


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Donna CBK wrote:

T9 is for all that does not need declaring on VAT return (non atable tax codes) - ie salaries, dividends, loans etc and companies not vat registered.
for a full list in sage go to the modules:
settings / configurations / tax codes

Hi Donna,

Totally agree with you, every transaction entered is T9.

Luther 


 



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luther


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MarkS wrote:
Rhianrach wrote:

If you are making exempt products and vat registered, then you should treat your supplier invoices the same as anyone else. Net in the net box T1 (assuming these are vatable supplies at the full rate and that T1 is set to 20%) in the vat box and your vat should work itself out. This then means that when you run your vat return then you will have no sales tax (as your products are exempt) but lots of purchase tax owed to you by HMRC. They don't like giving you money and a certain level used to trigger a visit, roughly £3000 so it may be worth while trying to keep it under that limit by more frequent vat returns.

 


Rhianrach totally wrong advice.

Admittedly at the time of your post you didnt know the client wasnt VAT registered.

However the point raised the matter of exempt supplies.  That should have raised the alarm bells of "partial exemption" so in no way are purchase invoice treated the same as any other VAT business.

Will need to identify what purchases are directly related to exempt supplies (cant be reclaimed) what purchases are directly relate to VATable supplies (if any and can be claimed) and what purchases are related to a mixture of exempt/VATable supplies (when the partial exemption rules are applied.)

Should never advise clients to keep claims below a "trigger visit" amount.  They are either entitled to reclaim the VAT or they are not.  If they are entitled to reclaim the VAT then they should claim it in full provided they have applied the correct rules and have all the relevant documentation to support.

Regards

MarkS


 Yep good point.

I sort of realised the mistake when I came back to re-read it, however someone had given great advice so didn't feel I needed to change it, however I shall accept my slap on the wrist with good grace. evileye

 

The trigger point is something that was actually advised by a VAT inspector, he stated that every time we claimed over a certain point " In any one vat return" we would trigger a visit, he recommended out of the goodness of his heart (yeah a vat inspector with a heart) that we have a higher frequency of vat returns purely to prevent that trigger amount in any one vat return.

I can see how you may of mis-construed what I said there.



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Steve


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To be honest if a company is an exempt supplier, they do not need to register for VAT and, therefore, it matters not what Sage tax code is used as VAT does not need to be record as VAT returns do not need to be done. The easiest and quickest way is to use T1 which is Sage default tax code and change the rate for this to 0 in settings.

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E&OE



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Whilst I can see your point on above I would like to mention by using anything but T9 it may lead to complications if t registering for VAT later on. You would have to make sure historical figures are not included in the VAT return as sales figures would pull thru - you would also have to keep putting 0.00 in VAT column

You could set defaults for customer, supplier and products under the settings.

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Donna CBK wrote:

Whilst I can see your point on above I would like to mention by using anything but T9 it may lead to complications if t registering for VAT later on. You would have to make sure historical figures are not included in the VAT return as sales figures would pull thru - you would also have to keep putting 0.00 in VAT column

You could set defaults for customer, supplier and products under the settings.


 If a business only makes exempt supplies (eg a care home) there is no necessity for it ever to register for VAT - there would be no point as it could not reclaim any.  Therefore it really doesn't matter what code is used in Sage.  If the business was using a different accounting program (eg QB) this problem with tax code would not arise as one can choose "not registered for VAT" nor would it if (heaven forbid these days) they were doing manual accounts. VAT just does not come into the equation.



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E&OE



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Great. T9 and full amount in net and nothing in VAT.

 

Thanks for the answers, guys.



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Hi all,

May I ask, which Code should be used for client entertainment (expenses with VAT on)?

T0 is set up as Exempt and Outside Scope

T9 is Non-Vatable

Thank you very much.

 



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