How the Point of Sale Retail scheme calculates your VAT liability

• The Point of Sale Scheme calculates your VAT liability by identifying the VAT element of goods and services you sell, at the time you make the sale.

• You must record all retail sales at the point of sale and produce a list of these standard rated, zero rated and lower rated goods each VAT quarter, this is known as your Daily Gross Takings.

• Daily Gross Takings are the total cash and credit card retail sales recorded in the VAT period at each VAT rate. These transactions should be recorded as bank, cash or visa receipts. Under the Point of Sale scheme you must produce a list of these transactions, therefore you should enter all Daily Gross Takings as bank receipts to the relevant bank account, entering the correct tax code for either standard, zero or lower rated goods.

• If you've lower rated goods, these must be entered using a different tax code. Sage Accounts, uses T5 for lower rated goods. However, the reports are designed to pick up T3 transactions, therefore you should either set up the T3 tax code to use with this scheme, or amend the report to pick up T5 transactions.

Set up a new tax code for lower rated goods

To correctly record transactions when using the Point of Sale Retail Scheme you must create new tax codes for any lower rated transactions that you need to record.

NOTE: T5 may already be configured as a lower rated tax code. However, the reports are designed to pick up T3 transactions, therefore you should either set up the T3 tax code to use with this scheme, or amend the report to pick up T5 transactions.

1. Settings > Configuration > Tax Codes tab.
2. Select the required tax code, for example T3 > Edit.
   

   NOTE: T3 is the recommended tax code as the Daily Gross Takings report includes T0, T1 and T3 transactions.

3. Amend the Edit Tax Code window as follows:

   Rate	Enter the lower rate for VAT, for example 5%.
   Include in VAT Return	Select this check box.

4. OK.
   
   To create further lower rated tax codes, repeat steps 2 to 4.
5. Apply > Close > when prompted to save the changes > No.

Enter retail sales for vatable goods under the Point of Sale Retail scheme

This section provides a guide to recording transactions relating to the Point of Sale Retail scheme in Sage Accounts.

When a retail sale is made for vatable goods, a bank, cash or visa receipt should be posted using the relevant tax code. For example, if a retail sale is made for standard rated goods with a gross value of £120.00 then the following bank receipt should be posted:

If a retail sale is made for lower rated goods with a gross value of £52.50 then the following bank receipt should be posted:

Once you've posted your retail sales, you need to produce your Daily Gross Takings report, for further information about this, please refer to the following section.

Run the Daily Gross Takings report

At the end of each VAT quarter you must produce a list of retail sales in that period. This list is produced by running the Daily Gross Takings report.

NOTE: The Daily Gross Takings report is included in the Sage 50 Accounts - Additional Reports Backup, to download please visit Sage Accounts downloads and updates.

1. VAT > Reports.
2. VAT Scheme Reports > Daily Gross Takings > Print.
3. Enter the date range required, for example the VAT period > OK.
4. Amend the Print window as required > OK.

You've now produced your Daily Gross Takings report. This Daily Gross Takings report shows the standard rated, T1, lower rated, T3 and zero rated, T0 retail sales for this VAT period. The information on this report can be used to calculate your Output Tax. You can now make any necessary adjustments to your VAT Return. Read more >

For further information about calculating your output tax using the Point of Sale scheme refer to Appendix A 'Calculating your Output Tax' in the VAT Notice 727/3 'Retail Schemes: How to work the Point of Sale scheme'.