As my subject title suggests I've been a bit of a wally
I have recently set up Sage for my employer and in setting up suppliers I mistakenly entered all invoices from start of financial year as opening balances. Using Sage Instant I was not able to correct my mistakes by changing T9 to T1 and calculating the NET and VAT, I have had to delete all these entries and re-enter. After a morning of banging my head on my desk, box 4 has now captured these VAT entries (hooray!)
However...as I believed that Box 7 was not picking up all the entries it should be, looking into it further I have realised that entries for bank charges, employee wages, HMRC payments and car tax payments I have coded as T9.
So, what I am asking is should I change the tax codes for these entries to T0 or T2 so that they can be included?
Car tax I have as T2, bank charges I put as T9, wages and HMRC are out of scope so T9. Bank charges are the only one I uhm and err on as I never seem to get a straight answer so I have just left them out of scope, you might want to have a read up on them.
Bank charges are mostly T9 unless you get an invoice. Eg (1) Day to day bank charges (for cheques/payins/cash and that sort of thing) - usually listed as Bank commission/monthly or quarterly charges do not attract tax and are therefore T9.
(2) Charges for the credit card machine - part of the charge ie rental of the terminal attracts VAT, whereas the purchases charges do not. So the VAT will be a small proportion of the overall charge and you should have an invoice for it - so T1
(3) Safe custody charges (eg for holding a box/will etc) - is Vatable at standard rate - again you will get an invoice - so T1 (Probably rare in most cases
(4) Bank audit fees - standard rated - will get an invoice so T1. (Again probably only seen by bigger companies these days)
Lots of other little ones like Status Enquiry fees are standard rated too and maybe Night safe (cant recall that one for sure
Hope that helps
__________________
Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
The bank charges are "commission" and for some reason I have chosen to code all of the items in questions as T9.
I am happy that the bank charges/HMRC payments/employee wages etc were not included in the actual VAT calculation whether they be T0/T2/T9 etc , but I was concerned that they hadn't been picked up for Box 7 - should I not be including these items in the total value purchases for the period?
It hasn't included any of these items in Box 7.
I am sorry if what I am asking is not clear...I've nearly run out of teabags, it's all going to pot here!
Bank charges are mostly T9 unless you get an invoice. Eg (1) Day to day bank charges (for cheques/payins/cash and that sort of thing) - usually listed as Bank commission/monthly or quarterly charges do not attract tax and are therefore T9.
(2) Charges for the credit card machine - part of the charge ie rental of the terminal attracts VAT, whereas the purchases charges do not. So the VAT will be a small proportion of the overall charge and you should have an invoice for it - so T1
(3) Safe custody charges (eg for holding a box/will etc) - is Vatable at standard rate - again you will get an invoice - so T1 (Probably rare in most cases
(4) Bank audit fees - standard rated - will get an invoice so T1. (Again probably only seen by bigger companies these days)
Lots of other little ones like Status Enquiry fees are standard rated too and maybe Night safe (cant recall that one for sure
Hope that helps
That's a great answer. We get invoiced separately for the credit card machine rental so all's good.
And totally get about T9 being outside the scope of VAT and therefore not being included in the total purchases for the period.
However...I am still a bit confused about the other purchases that I think I have mistakenly put as T9, but think should be included in the purchases total (box 7). These are wages and HMRC payments. Should these be T0 or T2 to allow them to be included in Box 7.
Please accept my apologies if I am harping on about the same question and am not understanding your replies.
Hi Janine
Dont apologise, we have all been there at some time or other (in fact Im there now with other queries!!) Here are some examples
T9 Transactions NOT involving any kind of VAT/outside scope eg Bank Transfers, Salaries, PAYE/etc, Loans, Dividends, MOTs vehicle licence duty, Local authority rates, Bank charges (except those above), Journal keying of prepayments and accruals (as invoices keyed with T1 already as appropriate)
T0 Zero rated transactions eg Sales outside of EU, Food purchases for cafes/restaurants/ food for subsistence
T2 Items that are Exempt from VAT eg Stamps, Insurance, finance charges
(NB Exempt and zero rated are different)
T5 Lower rate e.g. 5% Gas/electric.
Worth noting that T9 keeps these items off the VAT return, all other codes with report items and take the VAT at the relevant rate (be it 5%, 20% or 0%)
Hope that makes it clearer
__________________
Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
I actually use T0 for zero rate and exempt, and I use T2 for purchases from non VAT reg businesses. What do other people use for non VAT reg businesses?
Thank you Jo and Michelle, it is a real help to have that breakdown on tax codes. Once I got my head around the fact that T9 transactions were not included in the return, I did start to worry that the other items I had mentioned I had coded incorrectly. I've printed off your list now Jo and will stick it up on the wall to remind myself!
moment!
Much appreciated!
