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During this period you will need to ensure that you raise & record invoices correctly, depending on the classification of the goods/ services. You can see which items are impacted by the change here. Specific government instructions around the VAT rate changes and what it means for day-to-day processing can be found here. Unless already enabled, Sage 200 Standard/Education will need a lower rate VAT code of 12.5%.  TIP: If you already have a reduced rate of VAT and wish to report on items temporarily impacted by the VAT change you can create a separate VAT code to help you keep track.
Important Information: Additional Companies Should you set up additional data sets within your product you will need to ensure that the database is set up to include the reduced rate of VAT. How to check if you have a reduced rate of VAT enabled You will need to do the following: - Open Settings > Organisational and Financial > VAT Rates.
- Review the list of rates for one set to 12.5% for the lower rate.
If you don't already have a lower rate, see below. How to set up a VAT rate for the reduced rate - Open Settings > Organisational and Financial > VAT Rates
- Click Add and enter in detail including.
| Code | An available VAT Code number | | Name | This can be anything which is meaningful to your business | | VAT return | This must be ticked | | % | Set to 12.5% | | Input Code | Optional depending on your business setup | | Output Code | Optional depending on your business setup | Further Considerations VAT Return reconciliation
As part of this process if you identify an invoice where information has been recorded incorrectly, it is advisable to carry out a full error correction rather than amend values on the VAT return. For assistance with error corrections in the software please see the help file here. Accounting for supplies that straddle the temporary reduced rate
In most cases, you will simply account for VAT at 5% for supplies made between 15 July 2020 and 30 September 2021 and 12.5% between 1 October 2021 and 31 March 2022. They may however, there may be situations where you receive payments or issue invoices before 30 September 2021 for supplies that take place on or after 30 September 2021.
More information about this can be found in sections 30.7.4 to 30.9.2 of VAT notice 700. Default Customer/ Supplier rates
You may need to review any Customer or Supplier default VAT codes, where you solely engage with them for items connected with the reduced VAT rate. How to change the default VAT code - For Customer records navigate to Customers > Create & Amend Accounts > Amend Customer Details > select an account > Trading tab.
The Default VAT code can then be altered using the dropdown box.
Click Save after making the change.
- For Suppliers - Suppliers > Create & Amend Accounts > Amend Supplier Details > select an account > Trading tab.
The Default VAT code can then be altered using the dropdown box.
Click Save after making the change. Alternatively, you can prepare an import to change several records at once, further information on how to prepare this import can be found here: Customer Account Import
Supplier Account Import TIP: If you retain the import file you can use it to reverse when needed by simply changing the VAT Code.  CAUTION: Keep a list of any changes you make in the product as they will need to be changed at the end of the period approximately 6 months.
Do you operate under the Tour Operators Margin scheme?
Specific changes may be required to the way you process, further advice can be found in the VAT notice 709/5 available here. Where can I find further information about these changes?
The government has published a policy paper available here. |