TIP: Look at our common scenarios for trading between UK and the EU article to learn more when to use certain tax codes.

When you use tax code T18, we post the notional VAT amounts and a credit to avoid overpaying the supplier. Each month, you'll receive a statement from HMRC detailing your VAT postponements. Compare this with the amounts on your postponed transactions on your VAT return for that period. If the number differs, post an adjustment VAT-only invoice to your postponed accounting tax code if your number is lower than HMRCs. Post a VAT-only credit note to your postponed accounting tax code if your total is higher than HMRCs. Read on to learn more about processing these transactions.

With postponed accounting, you can account for import VAT on goods arriving in the UK on a VAT Return, instead of paying it immediately. The postponed accounting tax code is T18 by default. For information about how T18 works, read the T18 section in the default tax codes article.

If you use Sage 50 Accounts v27.0 or below, for help with postponed accounting postings refer to our tax code guide.

 TIP: The information below refers to automatic postings, which is only available if you have an active Sage 50 Accounts subscription. If you need to sign up, get in touch here.  

Posting a supplier invoice with postponed VAT

When you use the T18 tax code, or equivalent, for a purchase invoice, it has the following effect:

• The postponed VAT amount adds to the invoice value.
• A VAT only credit note posts to T18 for the postponed VAT value.  This reduces the outstanding value.
• The credit note allocates to the invoice automatically.
• The VAT due for the purchase adds to boxes 1 and 4 of the VAT Return so it's paid and reclaimed on the VAT Return.
• The credit note doesn't impact the VAT Return. It corrects the supplier balance.
• The net value of the purchase adds to VAT return box 7.
• If the invoice has multiple item lines with VAT values, a credit posts automatically for each line.

NOTE: By default, T18 is the postponed VAT code, but may differ depending on the tax codes you already have. 

Posting a supplier credit with postponed VAT

When you use the T18 tax code, or equivalent, for a purchase credit, it has the following effect:

• A VAT only invoice automatically posts to T18 for the postponed VAT value.
• The invoice allocates to the credit automatically.
• The VAT value for the credit reduces the value of boxes 1 and 4 of the VAT Return.
• The VAT on the VAT only invoice doesn't impact the VAT Return. It corrects the supplier balance.
• The net value of the credit reduces the value of VAT Return box 7.
• If the credit has multiple item lines with VAT values, an invoice posts automatically for each line.

NOTE: By default, T18 is the postponed VAT code, but may differ depending on the tax codes you already use.