Sage 200 - Tax rate troubleshooter

Summary

Use this wizard to determine the relevant tax rates to use when posting sales or purchase transactions.

Description

NOTE: For examples of what tax rates to use for popular goods and services, read more.

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. 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

This tax rates we recommend to use in this article are the Sage 200 default tax rates. If you have changed the tax rates, ensure you check which rate the tax code is before you use it to process the transactions. The Sage 200 default tax rates are set up as the following rates:

Resolution

View default tax codesnull;null;default

Code 0	Exempt transactions.
Code 1	Standard rated transactions
Code 2	Zero-rated transactions.
Code 4	Sale of zero-rated goods to customers in the EC.
Code 5	Sale of services to customers in the EC.
Code 6	Purchase of services from suppliers in the EC.
Code 7	Purchase of zero-rated services from suppliers in the EC.
Code 8	Purchase of standard rated goods from suppliers in the EC.

Is the transaction a sale or a purchase?

Salenull;null;wiz2,wiz1 Purchasenull;null;wiz9,wiz1

Is it a sale of goods or services?

Goodsnull;null;wiz3,wiz2 Servicesnull;null;wiz8,wiz2 Backnull;null;wiz1,wiz2

Is the sale of goods to the UK, EC, or the rest of the world?

UKnull;null;wizreversesales,wiz3 ECnull;null;wiz6,wiz3 Rest of worldnull;null;wiz7,wiz3 Backnull;null;wiz2,wiz3 Restartnull;null;wiz1,wiz3

Is the sale for reverse charge applied to mobile phones and computer chips?

NOTE: Reverse charge is only applied to the sale and purchase of mobile phones and computer chips where the net value of these items on an invoice exceeds £5000.

Yesnull;null;wizreversesales,wizreverseyes2 Nonull;null;wizreversesales,wiz4 Backnull;null;wiz3,wizreversesales Restartnull;null;wiz1,wizreversesales

Sales > Goods > UK > Reverse charge VAT for mobile phones and computer chips

For information about how to record reverse charge VAT, please contact HMRC for advice regarding which boxes are to be affected on your VAT Return.

Backnull;null;wizreversesales,wizreverseyes2 Restartnull;null;wiz1,wizreverseyes2

Is VAT charged on the goods?

Yesnull;null;wiz18,wiz4 Nonull;null;wiz5,wiz4 Backnull;null;wizreversesales,wiz4Restartnull;null;wiz1,wiz4

Purchase > Goods > UK > Reverse charge not relevant > Supplier not VAT Registered

Which tax rate to use	Use tax rate 2.
How this affects the VAT Return	This adds the net value of the purchase to box 7 of the VAT Return.

Backnull;null;wiz11,wiz4a Restartnull;null;wiz1,wiz4a

Are the goods classed as zero rated or exempt?

Zero ratednull;null;wiz19,wiz5 Exemptnull;null;wiz20,wiz5 Backnull;null;wiz4,wiz5 Restartnull;null;wiz1,wiz5

Has the EC customer provided their EC VAT registration number?

Yesnull;null;wiz21,wiz6 Nonull;null;wiz22,wiz6 Backnull;null;wiz3,wiz6 Restartnull;null;wiz1,wiz6

Do you have proof of exportation?

NOTE: Proof of exportation is defined in HMRC Public Notice 703 which is available on the HMRC website www.hmrc.gov.uk. For further information, please contact HMRC.

Yesnull;null;wiz23,wiz7 Nonull;null;wiz24,wiz7 Backnull;null;wiz3,wiz7 Restartnull;null;wiz1,wiz7

Is the sale of services to the UK, EC or the rest of the world?

UKnull;null;wiz25,wiz8 ECnull;null;wiz26,wiz8 Rest of worldnull;null;wiz27,wiz8 Backnull;null;wiz2,wiz8 Restartnull;null;wiz1,wiz8

Is it a purchase of goods or services?

Goodsnull;null;wiz10,wiz9 Servicesnull;null;wiz17,wiz9 Backnull;null;wiz1,wiz9

Is the purchase of goods from the UK, EC, or the rest of the world?

UKnull;null;wizreverse,wiz10 ECnull;null;wiz13,wiz10 Rest of worldnull;null;wiz36,wiz10 Backnull;null;wiz9,wiz10 Restartnull;null;wiz1,wiz10

Is VAT charged on the goods?

Yesnull;null;wiz28,wiz11 Nonull;null;wiz12,wiz11 Supplier not VAT registerednull;null;wiz4a,wiz11 Backnull;null;wizreverse,wiz11 Restartnull;null;wiz1,wiz11

Is the purchase for reverse charge applied to mobile phones and computer chips?

NOTE: Reverse charge is only applied to the sales and purchases of mobile phones and computer chips where the net value of these items on an invoice exceeds £5000.

Yesnull;null;wizreverse,wizreverseyes Nonull;null;wizreverse,wiz11 Backnull;null;wiz10,wizreverse Restartnull;null;wiz1,wizreverse

Purchase > Goods > UK > Reverse charge VAT for mobile phones and computer chips

For information about how to record reverse charge VAT, please refer to article .

Backnull;null;wizreverse,wizreverseyes Restartnull;null;wiz1,wizreverseyes

Are the goods classed as zero rated or exempt?

Zero ratednull;null;wiz29,wiz12 Exemptnull;null;wiz30,wiz12 Backnull;null;wiz11,wiz12 Restartnull;null;wiz1,wiz12

Has the VAT registration number been provided to the supplier?

Yesnull;null;wiz14,wiz13 Nonull;null;wiz15,wiz13 Backnull;null;wiz10,wiz13 Restartnull;null;wiz1,wiz13

If bought in the UK would the goods be zero rated or standard rated?

Zero ratednull;null;wiz31,wiz14 Standard ratednull;null;wiz32,wiz14 Backnull;null;wiz13,wiz14 Restartnull;null;wiz1,wiz14

Was VAT charged on the goods?

Yesnull;null;wiz33,wiz15 Nonull;null;wiz34,wiz15 Backnull;null;wiz13,wiz15 Restartnull;null;wiz1,wiz15

Is the purchase of services from the UK, EC or the rest of the world?

UKnull;null;wiz37,wiz17 ECnull;null;wiz38,wiz17 Rest of worldnull;null;wiz39,wiz17 Backnull;null;wiz9,wiz17 Restartnull;null;wiz1,wiz17

Sales > Goods > UK > Reverse charge not relevant > VAT charged

Standard rate

Which tax rate to use	Use tax rate 1.
How this affects the VAT Return	The tax amount appears in box 1, the net amount in box 6.

Reduced rate

Which tax rate to use	There is no reduced tax rate set up by default. You should create one within the Tax Rates screen in the Settings menu of Accounting System Manager using rate 1 as a template.
How this affects the VAT Return	The tax amount appears in box 1 and the net amount in box 6.

Backnull;null;wiz4,wiz18 Restartnull;null;wiz1,wiz18

Sales > Goods > UK > Reverse charge not relevant > VAT not charged > Zero rated

Which tax rate to use	Use tax rate 2.
How this affects the VAT Return	This adds the net value of the sale to box 6 of the VAT Return.

For more details about zero rated goods and services, please contact HMRC National Advice Service Helpline on 0845 010 9000, contact your local HMRC office or visit their website at www.hmrc.gov.uk.

Backnull;null;wiz5,wiz19 Restartnull;null;wiz1,wiz19

Sales > Goods > UK > Reverse charge not relevant > VAT not charged > Exempt

Which tax code to use	Use tax rate 0.
How this affects the VAT Return	This adds the net value of the sale to box 6 of the VAT Return.

For more details about exempt goods and services, please contact HMRC National Advice Service Helpline on 0845 010 9000, contact your local HMRC office or visit their website at www.hmrc.gov.uk.

Backnull;null;wiz5,wiz20 Restartnull;null;wiz1,wiz20

Sales > Goods > EC > VAT registration number provided

Which tax rate to use	Use tax rate 4.
How this affects the VAT Return	The net amount of the transaction appears in boxes 6 and 8.

Backnull;null;wiz6,wiz21 Restartnull;null;wiz1,wiz21

Sales > Goods > EC > VAT registration number not provided

Which tax rate to use	The transaction should be posted at the same rate of VAT if the goods were sold in the UK. For example, rate 1 for standard rate, rate 2 for zero rated.
How this affects the VAT Return	If applicable, VAT is posted to the ledgers and appears in box 1, the net amount appears in box 6.

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Sales > Goods > Rest of the world > Proof of exportation

Which tax code to use	Use tax rate 2.
How this affects the VAT Return	The net amount appears in box 6.

NOTE: Proof of exportation - When you sell goods abroad, an exportation document is obtained to state that the goods have been sent abroad and not sold in the UK. Proof of exportation is defined in HMRC Public Notice 703 which is available on the HMRC website www.hmrc.gov.uk. For further information, please contact HMRC.

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Sales > Goods > Rest of the world > No proof of exportation

Which tax code to use	The transaction should be posted at the normal UK rate. For example, tax rate 1 for standard rate, rate 2 for zero rated.
How this affects the VAT Return	The net element appears in box 6 and if applicable the VAT element appears in box 1.

NOTE: Proof of exportation - When you sell goods abroad an exportation document is obtained to state that the goods have been sent abroad and not sold in the UK. Proof of exportation is defined in HMRC Public Notice 703 which is available on the HMRC website www.hmrc.gov.uk. For further information, please contact HMRC.

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Sales > Services > UK

There are a number of grey areas and complexities associated with the supply of services and VAT. Because of this, please contact HMRC National Advice Service Helpline on 0845 010 9000, contact your local HMRC office or visit their website at www.hmrc.gov.uk to establish the VAT liability of the supply.

Depending on the response provided by HMRC, the transaction should be posted in one of the following ways:

Treat as Standard rated

Which tax rate to use	Use tax rate 1.
How this affects the VAT Return	The tax amount appears in box 1 and the net amount appears in box 6.

Treat as Zero rated

Which tax rate to use	Use tax rate 2.
How this affects the VAT Return	The net amount appears in box 6.

Treat as VAT Exempt

Which tax rate to use	Use tax rate 0.
How this affects the VAT Return	The net amount appears in box 6.

Treat as non-vatable

Which tax code to use	There is no non-vatable tax rate set up by default. You should create a new rate within the Tax Rates window of the Settings menu within Accounting System Manager. Note: As transactions in this category should not appear on the VAT return, you must ensure the 'VAT Return' box is not ticked.
How this affects the VAT Return	This does not affect the VAT Return.

Backnull;null;wiz8,wiz25 Restartnull;null;wiz1,wiz25

Has the EC customer provided their EC VAT registration number?

Yesnull;null;wiz40,wiz26 Nonull;null;wiz41,wiz26 Backnull;null;wiz8,wiz26 Restartnull;null;wiz1,wiz26

Sales > Services > EC > VAT registration number provided

Which tax rate to use	Use tax rate 5.
How this affects the VAT Return	The net amount appears in box 6.

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Sales > Services > EC > VAT registration number not provided

Which tax rate to use	Use tax rate 1.
How this affects the VAT Return	The tax amount appears in box 1 and the net amount appears in box 6.

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Sales > Services > Rest of the world

Depending on the response provided by HMRC, the transaction should be posted in one of the following ways:

Treated as a UK sale - Standard rated

Which tax rate to use	Use tax rate 1.
How this affects the VAT Return	The tax amount appears in box 1 and the net amount appears in box 6.

Treated as an EC sale

Which tax rate to use	Use tax rate 4.
How this affects the VAT Return	The net amount appears in box 6.

The service is outside the scope of UK VAT

Which tax rate to use	Use tax rate 2 or create a new tax code equivalent to rate 2.
How this affects the VAT Return	The net amount appears in box 6.

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Purchases > Goods > UK > Reverse charge not relevant > VAT charged

Standard rate

Which tax rate to use	Use tax rate 1.
How this affects the VAT Return	The tax amount appears in box 4, the net amount appears in box 7.

Reduced rate

Which tax code to use	There is no reduced tax rate set up by default. You should create one within the Tax Rates screen in the Settings menu of Accounting System Manager using rate 1 as a template.
How this affects the VAT Return	The tax amount appears in box 4, the net amount appears in box 7.

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Purchases > Goods > UK > Reverse charge not relevant > VAT not charged > Zero rated

Which tax rate to use	Use tax rate 2.
How this affects the VAT Return	The net amount appears in box 7.

For more details about zero rated goods and services, please contact HMRC National Advice Service Helpline on 0845 010 9000, contact your local HMRC office or visit their website at www.hmrc.gov.uk.

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Purchases > Goods > UK > Reverse charge not relevant > VAT not charged > Exempt

Which tax rate to use	Use tax rate 0.
How this affects the VAT Return	The net amount appears in box 7.

For more details about exempt goods and services, please contact HMRC National Advice Service Helpline on 0845 010 9000, contact your local HMRC office or visit their website at www.hmrc.gov.uk.

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Purchases > Goods > EC > VAT registration number provided > Zero rated

Which tax rate to use	Use tax rate 7.
How this affects the VAT Return	The net element appears in boxes 7 and 9.

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Purchases > Goods > EC > VAT registration number provided > Standard rated

Note the notional VAT element is picked up from ASM>Settings>VAT Rates where the EC Std PL must show 20% ( or the equivalent VAT Rate for Standard Rate )

Which tax rate to use	Use tax rate 8.
How this affects the VAT Return	A notional VAT element based on the code 1 tax rate appears in box 4 and box 2 (EC acquisitions). The net element appears in box 7 and box 9.

Note the notional VAT element is picked up from ASM>Settings>VAT Rates where the EC Std PL must show 20% ( or the equivalent VAT Rate for Standard Rate )

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Purchases > Goods > EC > VAT registration number not provided > VAT charged

The supplier must charge VAT on the goods purchased at the country of origin rate. For example, an Irish supplier charges VAT at 21%.

Post the invoice as 2 separate transactions:

Post the net element using tax rate 2.

Post the VAT element using a non-vatable tax rate. If you have not previously done so, you will need to create a new tax rate to accomodate this.

A/C	Date	N/C	Net	Rate	VAT
Supplier account reference	Date of the transaction	Nominal code for the purchase	Net element of the transaction	2	0.00
Supplier account reference	Date of the transaction	Nominal code for the purchase	VAT element of the transaction	Custom	0.00

How this affects the VAT Return - The net element posted using tax rate 2 appears in box 7. The VAT element is not included in the VAT Return.

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Purchases > Goods > EC > VAT registration number not provided > VAT not charged

Which tax rate to use	Use tax rate 2.
How this affects the VAT Return	The net element appears in box 7.

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Purchases > Goods > Rest of the world

No VAT is charged on the invoice for the goods but you receive an extra invoice from the import company for the duty and VAT. You cannot reclaim any import VAT paid until you have received form C79 from HMRC.

If you have received form C79null;null;step36a

We recommend to set up a new supplier account for the import company to post the import duty and VAT.

To record the purchase of the goods:

Post a purchase invoice to the supplier's account for the value of the goods with a value in the Net column only using tax rate 2. No VAT is calculated.

To record the import duty, post a purchase invoice to the import company using the duty nominal code:

Post a purchase invoice entering the net amount in the Net column, the VAT charged on the duty in the VAT column and tax rate 1.

To record the import VAT:

Post purchase invoices to the import company using the duty nominal code entering zero in the Goods value box and the import VAT in the Tax value field - use a tax rate of 1.

A/C	Date	N/C	Details	Goods Value	Rate	Tax value
Supplier account reference	Date of the transaction	Nominal code for the purchase	Goods	Net element of the transaction	2	0.00
Supplier account reference for the import company	Date of the transaction	Nominal code for the duty	Import duty	Net element of the duty	1	VAT element of the duty
Supplier account reference for the import company	Date of the transaction	Nominal code for the duty	Import VAT	0.00	1	Import VAT element

If you have not received form C79null;null;step36b

We recommend to set up a new supplier account for the import company to post the import duty and VAT.

To record the purchase of the goods:

Post a purchase invoice to the supplier's account for the value of the goods using tax rate 2. No VAT is calculated.

To record the import duty, post 2 separate invoices to the import company using the duty nominal code:

Post a purchase invoice entering the net amount in the Goods value field, 0.00 in the Tax value and tax rate 2.
Post a purchase invoice entering 0.00 in the Goods Value field, the VAT charged on the duty in the Tax value field and a non-vatable tax rate. You will need to create this within the Tax Rates screen of the Settings menu in Accounting System Manager if you have not already done so.

To record the import VAT:

Post a purchase invoice to the import company using a duty nominal code, entering zero in the Goods value and the VAT in the Tax value field - use a non-vatable tax rate.

A/C	Date	N/C	Details	Goods value	Rate	Tax value
Supplier account reference	Date of the transaction	Nominal code for the purchase	Goods	Net element of the transaction	2	0.00
Supplier account reference for the import company	Date of the transaction	Nominal code for the duty	Import duty	Net element of the duty	2	0.00
Supplier account reference for the import company	Date of the transaction	Nominal code for the duty	Import duty VAT	0.00	Non-vatable	VAT element of the duty
Supplier account reference for the import company	Date of the transaction	Nominal code for the duty	Import VAT	0.00	Non-vatable	Import VAT element

Once you receive form C79, the VAT can be reclaimed. To record this, post the following journal:

N/C	Details	Tax Code	Debit	Credit
15100	VAT Adjustment	Rate 1	Import VAT amount	0.00
15100	VAT Adjustment	Rate 1	VAT amount charged on import duty	0.00
15100	VAT Adjustment	Non-vatable	0.00	Total import VAT amount including the VAT charged on the duty

(15100 is the default nominal code for Input tax - please check your own code before processing).

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Purchases > Services > UK

There are a number of grey areas and complexities in relation to VAT and the purchase of services. Because of this, please contact HMRC National Advice Service Helpline on 0845 010 9000, contact your local HMRC office or visit their website at www.hmrc.gov.uk to establish the VAT liability of the supply.

Depending upon the response provided by HMRC, the transaction would be posted in one of the following ways:

Treated as a UK purchase - Standard ratednull;null;step1

Which tax rate to use	Use tax rate 1.
How this affects the VAT Return	The tax amount appears in box 4 and the net amount appears in box 7.

EC supplier has not charged VAT and reverse charge VAT has to be accounted fornull;null;step2

Which tax code to use	Use a custom tax rate for Reverse Charge purchases. When creating the code, ensure you tick the VAT Return box and choose 'Reverse charge purchase' in the EC Terms field. Do not enter a value in the % field.
How this affects the VAT Return	The tax amount appears in boxes 1 and 4 and the net element appears in boxes 6 and 7.

NOTE: The term "reverse charge" may be used for the purchase of services from the EC or the purchase of mobile phones and computer chips. The term is correct in both cases but the meaning is different - you must establish which reverse charge it is so that you can use the correct tax rate.

Foreign VAT has been charged on the supplynull;null;step3

The supplier has charged VAT at the country of origin rate. for example, Ireland at 21%.

The invoice must be posted as two separate transactions:

Post the net element using tax rate 2.
Post the VAT element using a non-vatable tax rate, entering the VAT amount in the Good value field.

A/C	Date	N/C	Net	Rate	VAT
Supplier account reference	Date of the transaction	Nominal code for the purchase	Net element of the transaction	2	0.00
Supplier account reference	Date of the transaction	Nominal code for the purchase	VAT element of the transaction	Non-vatable	0.00

How this affects the VAT Return - The net amount appears in box 7.

NOTE: If the foreign VAT has been charged in error and the invoice should have qualified for reverse charge, you should contact the supplier and give them your UK VAT Registration Number. The supplier should issue a credit note for allocation against the original invoice and a new invoice that does not show the VAT separately. You should then post the gross value of the new invoice against tax rate 7 as the VAT has already been paid in the EC.

The service is outside the scope of UK VATnull;null;step4

Which tax code to use	Use a non-vatable tax rate. This is not set up by default. You will need to create this manually if you have notr previously done so.
How this affects the VAT Return	This does not affect the VAT Return.

Reverse charge VAT on services supplied by businesses outside the UKnull;null;step5x

If a company is registered for VAT in the UK, and receives a service from a supplier who is outside the UK, they may be required to account for reverse charge VAT. Normally, it is the supplier of a service who accounts for any VAT due on the supply. However, in some circumstances the customer accounts for any VAT due.

In this example, you have received a purchase invoice from a supplier in the United States for $180 and using an exchange rate of 1.8.

Purchase Ledger > Invoice.
Enter the relevant information in the Purchase Invoice window to record the purchase invoice, for example:

A/C Date Ref N/C Details Net Tax Rate VAT
Account reference Invoice date Reference Nominal code Transaction details 100.00 Reverse Charge* 0.00
Save > Close.

A/C	Date	Ref	N/C	Details	Net	Tax Rate	VAT
Account reference	Invoice date	Reference	Nominal code	Transaction details	100.00	Reverse Charge*	0.00

*Use a custom tax rate for Reverse Charge VAT. When creating the code, ensure you tick the VAT Return box and choose 'Reverse charge purchase' in the EC Terms field. Do not enter a value in the % field.

You have now recorded the supplier invoice. Using this custom tax rate ensures that the correct values appear on the VAT Return.

The supplier is not VAT registerednull;null;nonvatpurchase

Which tax rate to use	Use tax rate 2.
How this affects the VAT Return	The net element appears in box 7.

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Purchases > Services > EC

Depending upon the response provided by HMRC, the transaction would be posted in one of the following ways:

Treated as a UK purchase - Standard ratednull;null;step5

Which tax rate to use	Use tax rate 1.
How this affects the VAT Return	The tax amount appears in box 4 and the net amount appears in box 7.

EC supplier has not charged VAT and reverse charge VAT has to be accounted fornull;null;step6

Which tax code to use	Use a custom tax rate for Reverse Charge procedures. When creating the code, ensure you tick the VAT Return box and choose 'Purchase Non-Related Services' in the EC Terms field. Enter the standard VAT rate value in the % field.
How this affects the VAT Return	The tax amount appears in boxes 1 and 4 and the net element appears in boxes 6 and 7.

NOTE: The term "reverse charge" may be used for the purchase of services from the EC or the purchase of mobile phones and computer chips. The term is correct in both cases but the meaning is different, you must establish which reverse charge it is so that you can use the correct tax code.

NOTE: Transactions using this tax code do not affect the balance on the input tax or output tax control accounts as there is no VAT value on the transaction.

EC Supplier has not charged VAT and zero rate would apply to the same service in the UKnull;null;step23a

Which tax rate to use	Use tax rate 7.
How this affects the VAT Return	The net element appears in boxes 6 and 7.

NOTE: This journal does not affect the value on the nominal ledger, therefore you can choose any purchase nominal code.

Foreign VAT has been charged on the supplynull;null;step7

The supplier has charged VAT at the country of origin rate, for example, Ireland at 21%.

The invoice must be posted as two separate transactions:

Post the net element using tax rate 2.
Post the VAT element using a non-vatable tax rate, entering the VAT amount in the Net column. You will need to create this non-vatable tax rate within the Tax Rates window of the Settings menu within Accounting System Manager if you have not previously done so.

A/C	Date	N/C	Net	Rate	VAT
Supplier account reference	Date of the transaction	Nominal code for the purchase	Net element of the transaction	2	0.00
Supplier account reference	Date of the transaction	Nominal code for the purchase	VAT element of the transaction	Non-vatable	0.00

How this affects the VAT Return - The net amount appears in box 7.

The service is outside the scope of UK VATnull;null;step8

Which tax code to use	Use a non-vatable tax rate. There is no non-vatable tax rate set up by default. You will need to create this manually in the Tax Rates window of the Settings menu within Accounting System Manager.
How this affects the VAT Return	This does not affect the VAT Return.

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Purchases > Services > Rest of the world

Depending upon the response provided by HMRC, the transaction would be posted in one of the following ways:

Treated as a UK purchase - Standard ratednull;null;step9

Which tax code to use	Use tax rate 1.
How this affects the VAT Return	The tax amount appears in box 4 and the net amount appears in box 7.

Foreign VAT has been charged on the supplynull;null;step11

The supplier has charged VAT at the country of origin rate, for example, Ireland at 21%.

The invoice must be posted as two separate transactions:

Post the net element using tax rate 2.
Post the VAT element using a non-vatable tax rate, entering the VAT amount in the Net column. You will need to create this non-vatable tax rate within the Tax Rates window of the Settings menu within Accounting System Manager if you have not previously done so.

A/C	Date	N/C	Net	Rate	VAT
Supplier account reference	Date of the transaction	Nominal code for the purchase	Net element of the transaction	2	0.00
Supplier account reference	Date of the transaction	Nominal code for the purchase	VAT element of the transaction	Non-vatable	0.00

How this affects the VAT Return - The net amount appears in box 7.

The service is outside the scope of UK VATnull;null;step12

Which tax code to use	Use a non-vatable tax rate. This does not exist by default. You will need to create this in the Tax Rates window of the Settings menu within Accounting System Manager if you have not previously done so.
How this affects the VAT Return	This does not affect the VAT Return.

Reverse charge VAT on services supplied by businesses outside the UKnull;null;step5b

NOTE: In this example, the company received a purchase invoice from a supplier in the United States for $180 and using an exchange rate of 1.8.

Purchase Ledger > Invoice.
Enter the relevant information in the Batch Supplier Invoices window to record the purchase invoice, for example:
A/C ref Date Reference Code Details Goods Value Rate Tax value
Account reference Invoice date Reference Nominal code Transaction details 100.00 Reverse Charge* 0.00
Save > Close.

A/C ref	Date	Reference	Code	Details	Goods Value	Rate	Tax value
Account reference	Invoice date	Reference	Nominal code	Transaction details	100.00	Reverse Charge*	0.00

You have now recorded the supplier invoice. Using the Reverse Charge tax rate ensures that the correct values appear on the VAT Return.

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