The business I work for buys goods from the Netherlands reasonably regularly and until now I have had no problem putting these purchases through Sage - but I have confused myself now with the various tax codes.
Some of these foreign suppliers are registered in the UK so charge us VAT - these I put through on a normal T0 or T1 code as appropriate. Is this correct?
Some are not, so do not charge VAT. I have been using the T7 code for these. Now I have just realised that there is also the T8 code. Am I correct in saying that if the goods would be zero-rated if VAT was applicable then T7 should be used and if the goods would be VATable if VAT was applicable then T8 should be used?
As a VAT registered business in the UK, when we buy goods or services from VAT registered businesses in EU we are not charged their local equivilant to VAT, but we then have to use the cross-border reverse charge mechanism to enter on our VAT return UK VAT as being owed on the purchase in box 2 and then reclaimed in box 4.
Pointless exercise to me, but that is tax for you.
This would be the reason that the invoices you receive from EU suppliers do not have their VAT on, as you are meant to charge yourself and then reclaim for yourself, but this is only the case provided you have given the supplier of the goods or services your UK VAT registration details, as they must submit this on their EC Sales List each month to ensure VAT is tracked.
Sorry, can't help on Sage VAT codes as we don't use Sage.
If the company they are buying from is invoicing from a UK VAT registered business, then it's normal UK VAT.
If the company is based in EU sells from an EU country and is VAT registered in that EU country then provided you have supplied them with your VAT registration in UK, they will issue invoices with no VAT and they are then entered in the two boxes discussed on VAT return (in and out).
If the company is based in EU or UK and they are not VAT registered I guess it's just zero rated.
But I would not say it up to you to "judge", as the rules are clearly defined and it is up to you to ensure you are following them, so check if the suppliers are VAT registered in their country (within EU) and that they have all your VAT details so you can use the cross-border reverse charge.
If you have not given them your VAT registration details in UK, they are obliged to charge their countries VAT and you must then reclaim that (which has supposedly been made easier, but sounds complex to me).
So - going back to my original question - this would mean that T7 is for things that would normally be T0 if purchased in the UK? And T8 for things that would normally be T1?
