Sage 200 2020 R2 and above - VAT rates and VAT settings

Summary

This article explains how each of the VAT rate settings affect transactions in Sage 200. It also explains what the default tax rates are and when you should use them.

Description

NOTE: This article describes the VAT Codes and settings for UK companies, further information on the new VAT code for Postponed Accounting for companies in Republic of Ireland can be found here

Resolution

NOTE: This article refers to Sage 200 Professional 2020 R2 (and above), Sage 200 Standard and Sage for Education. For information on VAT Rate and Settings for older versions of Sage 200 click here.

NOTE: For information on creating a new VAT Code for the UK Low Value Import Scheme, click here.

VAT Rate settings

VAT Details

Country Code	The country code of the company is specified within Accounting System Manager > Settings > Company Details. This has no default value and must be set to the relevant setting prior to beginning processing, for example, GB - Great Britain.
VAT registration no.	Also found within Accounting System Manager > Settings > Company Details.

Sage 200 default VAT rates

To view or amend the VAT rates, open the Settings menu within Accounting System Manager and choose VAT Rates.

Code/Rate	Description	Name	VAT Return	Terms	%
0	Exempt transactions	Exempt	Yes	Not Applicable	0.00
1	Standard rated transactions	Std Rate	Yes	Not Applicable	20.00
2	Zero rated transactions	Zero Rated	Yes	Not Applicable	0.00
4	Zero rated sale of goods and related services to customers in the EC	EC Zero SL	Yes	Sales Goods & Related Services	0.00
5	Sale of non-related services to customer in the EC	EC Service	Yes	Sales non-Related Services	0.00
6	Purchase of non-related services from suppliers in EC	EC Service	Yes	Purchase Non-Related Services	0.00
7	Purchase of zero rated goods and related services from suppliers in the EC	EC Zero PL	Yes	Purchase Goods & Related Services (Intra EU)	0.00
8	Purchase of standard rate goods and related services from suppliers in the EC	EC Std PL	Yes	Purchase Goods & Related Services (Intra EU)	20.00
16^1,2	Services Purchases UK from ROW	Purchase Services ROW (Reverse Charge)	Yes	Purchase Non-Related Services	20.00
18^1,3	Import Goods to GB from ROW	Import Goods ROW	Yes	Import Goods ROW Postponed	20.00

¹ Customers have the flexibility to create their own codes, these are example codes but are what will be used by the latest versions of 200 cloud, When upgrading from a previous version if these codes are already in use a prompt will appear to create to specify new codes.

² This VAT code can be used to record a purchase of services from outside the UK, where reverse charge applies.

3 This VAT code can be used for the import of goods where Postponed VAT Accounting is applied.

NOTE: For new databases created in 2020 R2 and above, the description of VAT Code 4 will show as 'EC Sales Goods' rather than 'Sales Goods & Related Services'.

Boxes VAT codes affect on the VAT Return

VAT Rate	Sale or Purchase	Net or VAT amount	Box
0	Sale	Net	6
	Sale	VAT	N/A
	Purchase	Net	7
	Purchase	VAT	N/A
1	Sale	Net	6
	Sale	VAT	1
	Purchase	Net	7
	Purchase	VAT	4
2	Sales	Net	6
	Sales	VAT	N/A
	Purchase	Net	7
	Purchase	VAT	N/A
4	Sales	Net	6 and 8
4	Sales	VAT	N/A
5	Sales	Net	6
5	Sales	VAT	N/A
6	Purchases	Net	6 and 7
6	Purchases	VAT	N/A
7	Purchases	Net	2³, 7 and 9
7	Purchases	VAT	N/A
8²	Purchases	Net	7 and 9
8²	Purchases	VAT	2 and 4
16²	Purchases	Net	6 and 7
16²	Purchases	VAT	1 and 4
18²	Purchases	Net	7
18²	Purchases	VAT	1 and 4

²This is notional VAT. No VAT is paid or reclaimed, the same value appears in boxes 2 and 4, cancelling each other out.
³The effect on box 2 is zero but the transaction will show when drilling down into the value.

Additional VAT terms are available in the product which are not set to a VAT code by default:

Reverse Charge Sales (Mobiles) 

Reverse Charge Purchases (Mobiles) 

CIS Reverse Charge Sales 

CIS Reverse Charge Purchases 

NOTE: For further information on the use of these VAT codes click here.

VAT codes for popular goods and services

CAUTION: If the goods or services you are recording do not appear in these lists or you are unsure about which VAT code to use, please contact HMRC.

Exempt Goods and Services - Rate 0

Some land and building sales.
Some finance charges.
Education and some training.
Health.
Betting and gaming.
Burials and cremation.
Postal services.
Insurance.

Zero rated goods and services - Rate 2

Most foods.
Children's clothing.
Books, newspapers.
Construction of new housing.
Passenger transport.
Medicines on prescription.

Non-vatable Items (no rate set up by default)

Wages.
Bank or cash transfers.
PAYE and NI contributions.
Capital.
Loans, dividends and gifts of money.

Create or amend a VAT rate

Open the Settings menu in Accounting System Manager, choose VAT Rates.
In the ASM - VAT Rate Details window, click Add. A blank line appears, ready to populate.

Complete the new line as follows:

Code	Enter the required number that will be used for selection throughout the program for this rate, e.g. 9..
Name	Enter a description to identify the VAT rate.
VAT return	To include transactions with this VAT rate in the VAT Return, select this check box.
Reverse Charge	Choose the category description that applies to the new rate. NOTE: Reverse charge categories should only be used for the sale or purchase of items that fall under the remit of carousel fraud, for example, mobile phones. It must not be used for standard reverse charge transactions.
%	The default rate of VAT that applies to this rate.
Input Acc. No.	Specify the default nominal code used for input VAT transactions with this rate.
Output Acc. No.	Specify the default nominal code used for output VAT transactions with this rate.

To save the settings click OK.

If you're using one of the Flat Rate schemes, the gross amount appears in box 6. Box 1 includes the gross amount x flat rate percentage.

This article provides general rather than specific guidance to assist all of our customers. We always do our best to make sure that the information is correct but as it's general guidance, no guarantees can be made concerning its suitability for your particular needs. The information is valid at the time of publishing and is provided without any warranty of any kind, express or implied. You should take professional advice if you require specific guidance on your individual circumstances, for example to ensure that the results obtained from using our software comply with statutory or regulatory requirements. For VAT, customs and excise and duties enquiries you should call the HM Revenue and Customs (HMRC) National Advice Service Helpline on 0300 200 3700, contact your local HMRC office or visit their website at www.hmrc.gov.uk In no event will we be liable to you for any direct, indirect, consequential or incidental loss or damage arising out of or in connection with your use of the information provided.
The VAT or tax codes used in this article are based on the default or recommended codes set up in the software. These may be different in your software.

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