Trading goods with the UK

Buy goods from the UK - Postponed Accounting

The UK's withdrawal from the EU means that most imports and exports from and to the UK must now be treated the same as Rest of World for VAT purposes. Revenue have also introduced a new postponed accounting scheme to reduce the cash flow impact of these changes. This affects how you record the import of goods within Sage 50 Accounts.

After 1 January 2021, a new Box, PA1, will be added to the VAT Return, and three new boxes, PA2, PA3 & PA4, will be added to the RTD. Since these will not exist in older versions of the software, you must create and use some new tax codes and run reports to identify the values for these boxes, and add them manually to your VAT Return and RTD.

TIP: If you have Sage 50 Accounts, the v27.1 update creates these tax codes for you. 

Create new tax codes

The following table shows all codes which will need to be manually created:

NOTE: If you've already used any of these tax codes for other purposes, you can create them using the next available code. 

How to post

Net only invoice - Goods only

• To record this, post a purchase invoice as follows:
  

  Type	Net	T/C	VAT
  Purchase invoice	Goods net amount	T39 - T50	Zero

• The VAT Return and RTD are affected depending on the tax code selected. Please see the tax code table above.

VAT only invoice - Import VAT only

• You must also create a customer account to contra the purchase invoice against.
• To record this, post a purchase invoice and a sales invoice as follows:
  

  Type	Net	T/C	VAT
  Purchase invoice	Zero	T39 - T50	Import VAT Amount
  Sales invoice (Contra)	Zero	T39 - T50	Import VAT Amount

• Once posted you must then contra the VAT transactions against a bank account:
  
  

   NOTE: If you regularly post this type of transaction, you may prefer to create a dedicated contra bank account to post the payment and receipt transactions to.

  Type	Net	T/C	VAT
  Purchase payment (contra bank), allocated to purchase invoices	Zero	T1 - Standard rate	Import VAT amount
  Sales receipt (contra bank), allocated to sales invoice	Zero	T1 - Standard rate	Import VAT amount

• The VAT Return and RTD are affected depending on the tax code selected. Please see the tax code table above.
  

Net + VAT - Goods and import VAT

• You must also create a customer account to contra the purchase invoice against.
• Then, to record this, post separate purchase invoices for the NET and VAT amounts to the supplier, and a sales invoice to the customer contra account created, as follows:
  

  Type	Net	T/C	VAT
  Purchase invoice	Zero	T39 - T50	Import VAT amount
  Sales invoice (contra)	Zero	T39 - T50	Import VAT amount
  Purchase invoice	Goods net amount	T39 - T50	Zero

• Once posted you must then contra the VAT transactions against a bank account:
  
  

   NOTE: If you regularly post this type of transaction, you may prefer to create a dedicated contra bank account to post the payment and receipt transactions to.

  Type	Net	T/C	VAT
  Purchase payment (contra bank), allocated to purchase invoices	Zero	T1 - Standard rate	Import VAT amount
  Sales receipt (contra bank), allocated to sales invoice	Zero	T1 - Standard rate	Import VAT amount

• The VAT Return and RTD are affected depending on the tax code selected. Please see the tax code table above.
• If you receive a separate invoice for import duty plus VAT, record this in the same way.

Calculate the manual figures and add them to the VAT Return and RTD

Download and restore the the Day Books Supplier Invoice and Credits reports

To make it easier for you we have created a report to help you calculate the figures you need to add to the VAT Return and RTD.

1. Click Download on the link below:
   

   Report name	View the report	Download

2. Enter your Sage website login details, then click Sign In.
3. Follow the on-screen instructions.

Calculate the manual figures for your VAT Return and RTD

1. Click Suppliers then click Clear to make sure no records are selected.
2. Click Reports then click My supplier reports and select the Postponed accounting transaction totals by tax code report.
3. Click Preview and select the following criteria:

   Supplier Ref	Leave this as it is.
   Transaction Date	Enter the dates of the VAT period you are reporting for.
   Tax code (To to T99)	Enter the Tax code you want to report for. For example T39.

4. Click OK.
5. From the report take the Invoice NET balance - Credit NET balance value and manually add it to the following boxes for the relevant tax code on you RTD before submitting:
   

   Tax code	Description	Boxes
   T39	Standard rate ROW import (Resale) Postponed VAT	P2 / Z2 / PA2 R1 / Z3 / PA3
   T40	Standard rate ROW import (Non resale) Postponed VAT	P2 / Z2 / PA2 R2 / Z5 / PA4
   T41	Zero rate ROW import (Resale) Postponed VAT	D2 / Z2 / PA2 J1 / Z3 / PA3
   T42	Zero rate ROW import (Non resale) Postponed VAT	D2 / Z2 / PA2 J2 / Z5 / PA4
   T43	Reduced rate ROW import (Resale) Postponed VAT	AC6 / Z2 / PA2 AH5 / Z3 / PA3
   T44	Reduced rate ROW import (Non resale) Postponed VAT	AC6 / Z2 / PA2 AH6 / Z5 / PA4
   T45	Second reduced rate ROW import (Resale) Postponed VAT	AC6 / Z2 / PA2 AH5 / Z3 / PA3
   T46	Second reduced rate ROW import (Non resale) Postponed VAT	AC6 / Z2 / PA2 AH6 / Z5 / PA4
   T47	Livestock rate ROW import (Resale) Postponed VAT	C6 / Z2 / PA2 H5 / Z3 / PA3
   T48	Livestock rate ROW import (Non resale) Postponed VAT	C6 / Z2 / PA2 H6 / Z5 / PA4
   T49	Flat rate compensation ROW import (Resale) Postponed VAT	B6 / Z2 / PA2 G5 / Z3 / PA3
   T50	Flat rate compensation ROW import (Non resale) Postponed VAT	B6 / Z2 / PA2 G6 / Z5 /  PA4

6. From the report take the Invoice VAT balance - Credit VAT balance value and manually add it to the following box on you VAT Return before submitting:
   • PA1

Sell goods to the UK

For businesses selling goods to the UK, excluding those using the Northern Ireland protocol, you should now treat this as a sale to a non-EC country. 

For this you would normally use the zero rated export of goods to customers outside EC tax code, T14.

Trading goods with Northern Ireland - Northern Ireland protocol

When trading goods with Northern Ireland, to avoid a hard border, the Northern Ireland protocol has been introduced.

Buy goods from Northern Ireland

Under the Northern Ireland protocol, buying goods located in Northern Ireland should continue to be treated like intra-community acquisitions after 1 January 2021.

Sell goods to Northern Ireland

Under the Northern Ireland protocol, selling goods to Northern Ireland should continue to be treated like intra-community dispatches  and distance sales after 1 January 2021.

Buy and sell services

There is no change in the way you buy and sell services to and from the UK. 

Please continue to process services as you always have. 

[BCB:48:Accounts Irish VAT disclaimer:ECB]