On the VAT Cash Accounting scheme, you pay and reclaim VAT on actual monies received or paid, rather than on invoices and credits received or issued. If required, you can change from the Standard VAT scheme to the VAT Cash Accounting scheme in Sage 50 Accounts.

When to change schemes

You should change schemes at a month or quarter end, after reconciling the VAT on the Standard VAT scheme and before entering any transactions under the VAT Cash Accounting scheme.

If you've entered any transactions in the new period before changing VAT schemes, you have two options to ensure the VAT is calculated correctly under the VAT Cash Accounting scheme:

• Take a backup, delete the transactions you have entered in the new VAT period, then reprocess them after changing your VAT scheme according to the steps below.
• Take a backup, restore your last backup before the transactions were entered, then reprocess them after changing your VAT scheme according to the steps below.

 CAUTION: If you restore a backup, make sure your previous VAT period has been VAT reconciled before changing the VAT scheme, and also make sure the VAT return matches the one made before you restored the backup.

Prepare to change schemes

1. Take two backups of your data and label them 'Before changing to VAT Cash Accounting'.
2. Calculate and reconcile and complete the VAT Return for your final Standard VAT scheme period, including posting the VAT Transfer.
3. To check that all VAT transactions are reconciled click VAT then click VAT Return and calculate the VAT Return up to the end of your Standard VAT period.
   
   There should be no transactions found.
   
   
4. If you want to access the saved VAT Returns after switching schemes, make an archive of your data.

You're now ready to change from the Standard VAT scheme to the VAT Cash Accounting scheme.

Change schemes

1. Click Settings and click Company Preferences then click VAT.
2. Click the VAT Scheme drop-down and click VAT Cash Accounting.
   
   

   You can't amend this setting if you've transactions on your audit trail that haven't been VAT reconciled.

3. A warning prompts you to check your recurring entries before processing them, to continue click OK then click OK.

You've now changed Sage Accounts to the VAT Cash Accounting scheme. 

Create and amend the tax codes

You should now change the tax codes to make sure that the VAT reconciled under the Standard VAT scheme isn't reconciled a second time under the VAT Cash Accounting scheme.

The table below lists the tax codes to amend and the settings to apply:

Tax Codes	Action
T30 - T38	Edit the tax code applying the same settings as on T0 to T8. For example, T30 should be the same as T0, T31 the same as T1 and so on. NOTE: If you have existing tax codes set up within the T30 to T38 range, simply choose another range of unused tax codes instead.
T0 - T8	Edit the tax code and clear the Include in VAT Return check box.  NOTE: When you clear the Include in VAT return check box on any tax code, you can no longer view saved VAT Returns which include this tax code. As a workaround, open the archived data you made previously to access the saved VAT Returns.

1. Click Settings then click Configuration and click the Tax Codes tab.
2. From the list of tax codes, select the tax code to be amended then click Edit.
3. Complete the Edit Tax Code window as required then to save the new tax code click OK.
   
   The tax code saves and the Tax Codes window appears. If required, to edit another tax code repeat steps 2 and 3.
   
   
4. Click Apply then click Close, if you are prompted to save the changes, click No.

You've now created and amended the tax codes.

Prepare your data before processing

Before you enter any transactions under the VAT Cash Accounting scheme, you must prepare your data as follows:

NOTE: The Batch Changes feature can be used to update multiple records at the same time. This feature isn't available in Sage 50 Accounts Essentials or Sage Instant Accounts.

You've now ready to use the VAT Cash Accounting scheme.