I work for a client who regularly exports products to the "Rest of the World" and therefore zero rated. Should I be using T0 for these or another code? Not sure if they should be showing on the VAT return or not.
Tony, I think Keren is right, export of goods outside the EC are zero rated, and therefore T0. The sales still appear on the return, but there is obviously no VAT.
I often see T9 used in error (or in other software - as non VATable transactions) for items that are actually Zero rated or exempt as Nick pointed out.
Items that do not involve VAT are things like Salaries, Corporation Tax, National Insurance etc.... They are all items that will never under any circumstances be VATable even if you had to invoice someone in the UK for the item as they are outside the scope of VAT. Items in the UK are exempt because the government has decided they are - which does not mean they are outside the scope of VAT.
An invoice for a rest of the world product is only not VATable because the product leaves the UK - so it is in the scope of VAT, but not chargeable - hence it becomes Zero rated. And a Donna points out, need to be included in the VAT return - T9 items do not.
This is the simplified version (that's if it makes sense?) - but it can actually be a bit more complicated in detail!
-- Edited by YLB-HO on Tuesday 1st of March 2011 07:42:28 PM
